SGR’s Cooperative and Condominium Practice Group has received many questions concerning compliance with the federal Corporate Transparency Act (“CTA”) by cooperatives and condominiums. This bulletin is intended to provide guidance and clarification.
The CTA was enacted by Congress in 2021 to assist in prosecuting money laundering and other illicit activities by establishing a national registry, maintained by the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN), that includes information regarding individuals who control certain entities identified as “reporting companies”. Below are key components you should be familiar with:
1. The CTA in its current form applies to all New York cooperatives, with the exception of those that have (a) annual gross receipts exceeding $5,000,000 and (b) more than 20 full-time employees.
2. There is no consensus whether the CTA applies to New York condominiums, and, as of this date, FinCEN has issued no guidance on the issue. Condominiums may elect to comply if they want to avoid a risk of penalties for non-compliance.
3. The first reports to FinCEN by covered entities must be submitted prior to January 1, 2025.
4. The reports must identify (a) all persons, if any, owning more than 25% of the cooperative’s stock (or, in the case of a condominium that elects to file, 25% or more of the condominium’s common interests), (b) all persons serving on the cooperative’s (or condominium’s) board, and (c) in the unlikely event that principal officers (president, vice president or treasurer) are not board members, those persons as well. (If a 25% owner is itself an entity, such as a trust or a limited liability company, the persons controlling that entity must be identified.)
5. For each person identified to FinCEN, the following information must be provided: (a) name, (b) address, (c) date of birth, and (d) a copy of an identifying government- issued document (which has not expired) containing a unique number, such as a driver’s license, a state-issued ID, a U.S. Passport, or (in the case of a non-U.S. citizen without other identification) a foreign passport. FinCEN does not ask for and does not require the submission of social security numbers. Scanned copies of the identification used by individuals must be submitted with the report.
6. The information submitted to the FinCEN registry is not to be made available to the general public.
7. Once an initial report has been submitted to FinCEN, it must be updated within 30 days of any change in the information initially submitted, such as a change in board membership or the sale of the interest of a 25% owner.
8. Reports may be filed in paperless form on a website/portal maintained by FinCEN at https://fincen.gov/boi.
9. The same website makes available a pdf version of a form for the report that may be downloaded, completed offline, and then submitted online.
10. Although various corporate service companies offer CTA filing services, the reporting information is probably most efficiently collected and submitted by managing agents. Boards and managing agents should confer regarding any division of responsibilities.
11. The CTA authorizes civil and criminal penalties for willful failure to report, complete or update information.
To assist in compliance with reporting requirements, FinCen makes materials available at https://fincen.gov/boi. We suggest that those who take on the responsibility for compliance with the CTA review those materials, and check the site with enough frequency to keep abreast of updates. For more information, contact our attorneys in the Cooperative and Condominium Practice.