The United States Citizenship and Immigration Services (USCIS) oversees the EB-5 Immigrant Investor Program, which grants investors and their immediate families permanent residency in exchange for a minimum investment in a project that has proved to generate at least 10 full-time U.S. jobs. Significant capital investment funds have been created under this recently renewed and extended program, resulting in the creation of numerous employment that boosts the U.S. economy.
The USCIS provides licenses to privately (or publicly) owned entities that enable them to generate EB-5 funding and promote job creation more successfully to supervise and promote the program. A regional center is an accurate word for this entity.
Regional centers have frequently accomplished their objectives and have demonstrated valuable tools for investors seeking permanent residency through a safe and passive investment. But there have also been a considerable number of incidents of fraud. These cases frequently elicit a significant media response, and over time, this unfavorable coverage has impacted the program's reputation.
Recently, Congress has made amends. The EB-5 Reform and Integrity Act of 2022 was signed on March 15. Here are four specific policies that business leaders and investors should know of.
1. Regional Center Monitoring
Regional centers are required to maintain meticulous records by the EB-5 Reform and Integrity Act. In effect, every federally registered regional center will be expected to go through a complete audit, which will be carried out by the USCIS at least every five years. Additionally, each EB-5 project shall undergo at least one in-person site visit from the USCIS. Accountability has been significantly increased by these audits and site inspections, which may give investors a sense of security.
2. Measures for Transparency
Every project authorized by the EB-5 Program must detail how the cash was used. Regional centers need to submit a report to investors outlining how the funds were utilized within 30 days of the funds being used. In the future, regional centers will also need a third-party fund administrator who approves each withdrawal from escrow made to cover project-related costs. The requirement that a third-party EB5 Visa attorney or CPA sign off on the flow of funds offers a new level of anti-fraud security.
3. Information About Compensation
Regional centers are compelled to report how much they are paid for raising these funds, including the total amount of all their finder agents' profits, as an additional measure of openness. Regardless of whether they live and work abroad or in the United States, every agent hired or contracted by a regional center must register with the USCIS.
The amount the agent was compensated will also be declared in the client's application to the USCIS each time the regional center hires a new agent, and the agent refers a client to the project. The total sum will then be visible to both the client and USCIS. It can prevent moral hazard because occasionally the EB-5 projects that received the most market attention also offered the highest commissions.
4. Flexibility
In projects where things don't proceed as expected, the EB-5 Reform and Integrity Act enables a more forgiving attitude toward investors. Perhaps the initiative fizzled out, or the regional center they invested in was subsequently shuttered or closed. With 180 days' notice, investors can now switch projects and regional centers without reapplying. The investor must provide additional funds in the amount necessary to create the desired number of jobs.
The Impact
Although previous investors, regional centers, or projects that have already secured EB-5 financing before March 15 will not be impacted by these amendments, everyone going ahead will be significantly impacted. The project offerors will probably incur compliance expenses; to some extent, these costs may be passed on to investors. Increased compliance costs may also have the unintended effect of driving away smaller businesses or projects from the market, leaving only larger enterprises available to investors.
Similar to any new law, the regulatory authority in charge of it will have a large say in how it is read and put into practice (in this case, the USCIS). History has shown that EB-5 providers should adopt a cautious approach when adhering to reporting and transparency standards until the USCIS has had enough experience to make it clear what is expected in terms of best practices.
USCIS has been proactive about accelerating processing times and has announced plans for a formal assessment of how to do it next year. As part of this evaluation, they plan to increase pay thanks to the extra money they will receive from forcing regional centers to rebrand.
By delegating the responsibility of ensuring compliance from the USCIS to the private sector, these improvements will improve program efficiency in addition to investor safety. As a result, the USCIS won't have to spend as much time ensuring that it is run properly. As an EB-5 Visa Attorney company, we hope the USCIS will use technology to simplify and enhance record-keeping. The development of an online submission portal would greatly simplify the process for all parties involved, given the volume of new reporting required.
Note: This website's content is meant to be general; it does not constitute legal or financial advice. Only a licensed expert with a total understanding of all the information and circumstances of your specific situation can provide legal or financial advice. Before enrolling in the EB-5 program, you should contact a visa attorney with legal, immigration, and financial knowledge.