The federal Corporate Transparency Act (“CTA”) requires that corporations submit a report to the Financial Crimes Enforcement Network (“FinCEN”) before January 1, 2025, with information on the persons who exercise substantial control over the corporation. As currently in place, condominium and community associations that are incorporated under the Illinois Not for Profit Corporation Act need to comply with the CTA’s reporting requirements. However, we recommend that condominium and community associations incorporated prior to January 1, 2024, delay registering at this time, as legislative efforts are underway to seek an exemption for such associations and to extend the registration deadline. 

WHAT YOU NEED TO KNOW 

• As currently in place, condominium and community associations that are incorporated under the Illinois Not for Profit Corporation Act need to comply with the CTA’s reporting requirements.
• The initial reporting deadline is January 1, 2025, for associations existing as of January 1, 2024. Associations formed on or after January 1, 2024, must file reports within ninety days of incorporation.
• We recommend that condominium and community associations incorporated prior to January 1, 2024, delay registering until at least August 1, 2024, pending the outcome of legislative efforts to seek an exemption for such associations and to extend the registration deadline. 
• If CTA reporting is required, associations will need to identify and report information about the people who exercise substantial control over the association; namely, the members of the association’s Board of Directors.

The CTA was enacted to stop individuals from illegally moving money into the United States by using corporations and other legal entities to conceal their identity. FinCEN is the bureau of the U.S. Treasury that is charged with enforcing the CTA. FinCEN has adopted reporting requirements that, as currently in place, apply to all incorporated Illinois condominium and homeowners’ associations. The CTA requires that corporations file a form with FinCEN to disclose information about “Beneficial Owners” who control the corporation or own a significant portion of the corporation. “Beneficial Owners” are generally the members of the Board of Directors who exercise substantial control over the corporation. The CTA also imposes penalties for failure to comply. 

What are the CTA reporting deadlines? Should associations file now? 

An association that was incorporated after January 1, 2024, should comply with the CTA within ninety (90) days of incorporation. Corporations existing before January 1, 2024, currently have until January 1, 2025, to file the required report. Further, corporations must report within thirty (30) days of any change in the key information listed below. 

However, because efforts are being made to seek an exemption for condominium and homeowners associations and to extend the registration deadline, we are recommending that condominium and community associations incorporated prior to January 1, 2024, delay registering until at least August 1, 2024. If associations are not exempted and the deadline is not extended, the required filing must be submitted to FinCEN before January 1, 2025. Condominium and homeowners associations incorporated after January 1, 2024, however, should comply with the FinCEN requirements within ninety (90) days.

What information must be reported?

If a filing is required, the report must include the following information and must be updated whenever this information changes:

1. Association’s legal name and “doing business as” name (e.g., “85 Palm Lane Condominium Association” and its familiar name “The Palm at 85”);
2. Current street address of its principal place of business (e.g., the property itself, not the management company’s offsite address);
3. The state in which the association is located and incorporated;
4. The association’s EIN/Tax ID number; and
5. “Beneficial Owner” Information – the Board Members and owners, if any, of 25 percent or more of the association:

a. Name

b. Date of Birth

c. Residential Address

d. Identification Document Copy – Current and Valid: State ID, Passport, Driver’s License, Foreign Passport (if no US documents available) 

What are the penalties for failure to comply with the reporting requirements?

The penalty for failure to comply is a fine of $500 per day, up to $10,000 for failure to file on time and/or imprisonment of up to two years for willfully submitting false information or failure to submit updated beneficial ownership information to FinCEN. We expect that fines will be the primary method of enforcement, but the threat of criminal prosecution will be compelling. Information that beneficial owners submit is protected, too – there are civil and criminal penalties for unauthorized use of beneficial owner information by the parties who gather and access it. 

Would the FinCEN form be accessible to owners?

No. Neither the Illinois Condominium Property Act nor the Chicago Condominium Ordinance require owner access to any CTA documents or FinCEN forms at this time. 

Do we need to provide information on committee and commission members to FinCEN?

No. Under Illinois condominium law, committees and commissions are only advisory, do not have decision-making authority, and therefore do not have “substantial control” over an association’s affairs. 

What if a board member or 25 percent owner refuses to provide the needed information?

Associations should still file the required forms and updates even if a director or owner refuses to provide their identifying information. While the responsibility for reporting under the CTA falls to the reporting company itself, liability for failure to report can run to “any person” involved in the filing or omission. We expect further guidance from FinCEN on this issue in the future. 

Do small associations need to comply too? 

If large associations must comply, so must small associations.  

Does the CTA apply to unincorporated associations?

No, the CTA applies only to incorporated entities.