CORPORATE TRANSPARANCY ACT UPDATE: ENFORCEMENT HAS BEEN TEMPORARILY HALTED

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The Corporate Transparency Act (CTA) is a law that was enacted in January 2021 as part of the Anti-Money Laundering Act of 2020 to combat money laundering, terrorism financing, and other illicit activities by increasing transparency in corporate ownership. The law requires certain companies, including homeowners’ associations, to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The CTA reporting requirements took effect on January 1, 2024, for companies that were formed on or after January 1, 2024. Companies that were formed before January 1, 2024, were given until January 1, 2025, to comply.

Compliance with the CTA has been temporarily delayed due to court action. In December 2024, the Department of Justice filed an emergency application with the U.S. Supreme Court seeking a stay of nationwide injunction that had been issued by a federal court which halted enforcement of the CTA. The injunction was issued in a case filed by a coalition of business groups that argued the CTA’s reporting requirements were an infringement on privacy rights. The Supreme Court has not yet issued any rulings on the matter.

Separate and apart from the court actions, bills have been introduced in Congress to repeal the CTA. The bill filed in the House of Representatives is identified as “H.R. 8147,” and the bill filed in the Senate is identified as “S. 4297.” Both bills are identical in their language and have called the proposed Act, “Repealing Big Brother Overreach Act.”

The rulings in the pending legal actions do not mean that the CTA has been permanently blocked, but rather that its enforcement has been temporarily halted pending further court proceedings. Thus, while compliance is on hold for now, homeowners’ associations should stay informed about updates to avoid missing any future deadlines or requirements.