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EB-5 Question of the Week: What are the key security measures introduced by the EB-5 Reform and Integrity Act?

The EB-5 Reform and Integrity Act of 2022 (RIA) is the new EB-5 legislation which was signed into law in March 2022 and became effective in May 2022. The RIA reauthorized the EB-5 Regional Center Program through September 30, 2027 and implemented various changes to the program increasing its transparency and security for foreign nationals.

The EB-5 program allows foreign investors to obtain U.S. Green Cards for themselves and their qualifying dependents (spouse and unmarried children under 21 years of age) with a minimum investment of $800,000 in a project sponsored by a regional center. A regional center is an economic unit designated by the United States Citizenship and Immigration Services (USCIS) that pools investments of EB-5 applicants to meet various investment and job creation requirements.

The RIA introduced new security measures which are beneficial for investors seeking to participate in the EB-5 program. Some of the key security measures implemented by the RIA are outlined below.

Periodic Audit of Regional Centers

One such security measure is the audit requirement. The RIA requires regional centers to be audited by the Secretary of Homeland Security at least once every five years. Each audit must include a review of any documentation required to be maintained by the regional center, including but not limited to annual statements, and a review of the flow of EB-5 investors’ capital into any project. A regional center that fails to satisfy the audit requirements will lose its designation.

Appointment of a Fund Administrator

Another security measure is the requirement for all new commercial enterprises (NCEs) to retain a fund administrator. The fund administrator must be independent and cannot be directly related to the new commercial enterprise, the regional center associated with the NCE, the job creating entity, or any of the principals or managers of these entities. Additionally, the fund administrator must be licensed, active, and in good standing as a certified public accountant, an attorney, a broker-dealer or an investment adviser registered with the Securities and Exchange Commission (SEC) or another person that meets the requirements established by the Secretary of Homeland Security. The fund administrator must monitor and track any transfer of amounts and must ensure that transfers comply with governing documents including organizational, operational, and investment documents. For the sake of transparency, the fund administrator must periodically provide the investor with information about the activity of the account in which the capital investment is held.

Establishment of the EB-5 Integrity Fund

The RIA established the EB-5 Integrity Fund, which will be used by USCIS to administer the EB-5 Regional Center Program. Pursuant to the RIA, USCIS must collect a fee from each designated regional center to finance the EB-5 Integrity Fund.

​​DHS will use the EB-5 Integrity Fund for the following purposes:

      • to conduct investigations based outside of the U.S., such as monitoring and investigating EB-5 related events and promotional activities and ensuring that investors’ funds originate from a lawful source and through lawful means,
      • to detect and investigate fraud or other crimes,
      • to determine whether regional centers, new commercial enterprises, job-creating entities, and immigrant investors (and their eligible spouses and children) comply with U.S. immigration laws,
      • to conduct audits and site visits, and
      • to conduct other activities that DHS deems necessary.

Site Visits

The RIA provides that the Security of Homeland Security will perform site visits to regional centers and will perform at least one site visit to each NCE or job creating entity, or the business locations where any jobs are claimed to be created.

Submission of Annual Statements by Regional Centers

Each regional center is required to submit an annual statement in a manner prescribed by the Secretary of Homeland Security. The annual statement must include a certification that the regional center is in full compliance of the requirements of the RIA. It must also include a description of any pending material litigation or bankruptcy proceedings, or material litigation or bankruptcy proceedings resolved during the preceding fiscal year. The annual statements must include a description of how the EB-5 investors’ capital is being used to execute each project in accordance with the filed business plan, evidence of the commitment of capital to each project, and evidence of the progress made toward the completion of each project.

The above key security measures are vital for elevating the standard of accountability among regional centers in the EB-5 industry, offering an extra layer of confidence for foreign investors. These security measures have increased the attractiveness of the EB-5  program for families wishing to access America. If you are interested in finding out more about the U.S. golden visa program and whether you and your family qualify, contact our team today for a free consultation.

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