Since the EB-5 Reform and Integrity Act of 2022 (RIA) was passed in March 2022, the EB-5 program has undergone several significant changes that have increased the accountability of all involved stakeholders and made the program much safer for investors.
The EB-5 visa is a U.S. immigrant investor visa that allows qualified foreign investors to receive a Green Card in exchange for investing a minimum amount in a business enterprise and creating requisite jobs for U.S. workers.
United States Citizenship and Immigration Services (USCIS) administers the program and issues updates from time to time regarding policy revisions affecting EB-5 participants.
On July 16, 2024, USCIS issued a policy guidance to address the consequences of noncompliance by various entities in the EB-5 Regional Center Program. Through the update, USCIS interpreted provisions in the RIA for sanctioning noncompliant regional centers, new commercial enterprises (NCEs), job-creating entities (JCEs), and investors.
The guidance identified malpractices that would require USCIS to take adverse action on certain EB-5 petitions, applications, and benefits. It also outlined special considerations for safeguarding good-faith investors who may retain eligibility even if their associated regional center, NCE, or JCE is facing sanctions due to noncompliance.
In this article, we will provide a summary of the USCIS guidance and its implications for EB-5 investors who may have filed their petitions before or after the RIA came into effect.
Highlights of the USCIS Update
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Highlights of the USCIS Update
Before the RIA introduced much-needed reforms and integrity measures in the EB-5 program, USCIS had few options to act against noncompliance or misconduct by various EB-5 participants.
Several new regulations brought in by the RIA have given USCIS a lot more authority to penalize noncomplying entities while protecting innocent investors from getting disqualified for no fault of their own.
To incorporate statutory reforms stipulated in the RIA, USCIS has updated Part G, Investors, in Volume 6 of its policy manual and added a new Chapter 8, Sanctions and Discretionary Determinations, which explains the process and factors USCIS would consider when assessing sanctions.
Here’s a summary of what has changed in USCIS’s updated policy manual.
Types of Sanctions for Noncompliance
Based on the severity of the violation, the RIA authorizes USCIS to levy different types of sanctions on EB-5 participants, including suspension, debarment, and termination.
For any given violation, USCIS may issue a suitable sanction to more than one party or, if required, issue more than one sanction to the same individual or entity.
Suspension
A suspension typically lasts for the period specified in the notice or until USCIS determines that the violation has been cured. It entails temporarily disallowing the suspended entity from some or all forms of participation in the EB-5 program. A suspended regional center, however, still retains its designation and must continue to comply with requirements such as the filing of annual statements and payment of the EB-5 Integrity Fund fee.
During the suspension period of a regional center, USCIS may continue to adjudicate I-526E petitions for investors associated with projects that have an I-956F petition approval. However, it may hold adjudication of pending Form I-956F applications (and any associated Form I-526E petitions) and deny any new Form I-956F applications from the suspended regional center.
When an NCE or JCE is suspended but the I-956F application has been approved, USCIS will hold adjudication of investor Form I-526E petitions associated with that project.
Debarment
Debarment by USCIS would mean prohibiting an individual or entity from any participation in the EB-5 program, precluding all future involvement in the program.
USCIS has the authority to debar an NCE or JCE based on noncompliance or due to misconduct under applicable statutory provisions. However, merely failing to establish investor eligibility for visa classification or removal of conditions, such as not creating sufficient employment, will not be a reason for debarment.
Concerning threats to the national interest and fraud, misrepresentation, deceit, and criminal misuse, USCIS can permanently debar any individual or entity associated with a terminated or debarred regional center, NCE, or JCE if USCIS finds that they were a knowing participant in the conduct that led to the termination or debarment.
If USCIS debars a regional center, NCE, or JCE, it also notifies affected investors who have 180 days to reassociate with a new regional center, NCE, or JCE.
Termination
USCIS is authorized to terminate regional centers, which means they lose their designation under the program and can no longer file project applications or seek investors. Affected investors are also notified, and they can reassociate with a new regional center or NCE within 180 days.
Discretionary Determinations
The revised rules state that USCIS holds the discretion to deny or revoke the approval of an EB-5-related petition, application, or benefit if it determines that the approval of the petition is a threat to public safety or national security or involves fraud, deceit, intentional material misrepresentation, or criminal misuse. This includes termination of regional center designation or debarment of a JCE or NCE.
In an effort to restrict bad players from undermining the integrity of the EB-5 program, USCIS has clearly outlined activities that could warrant sanctions by the agency.
The guidance further says that while USCIS does not sanction individuals or entities for pre-RIA actions, significant or recurring pre-RIA violations or illegalities may be considered while assessing the severity of a post-RIA violation.
Protecting Good-Faith Investors
USCIS guidance maintains that investors who participated in the EB-5 program with the intention of complying with its requirements, including those who filed their petitions before the enactment of the RIA, will be provided a pathway to continue their eligibility for the program if their regional center, NCE, or JCE is sanctioned. This comes as a relief for innocent investors fearing disqualification due to the misconduct of other entities.
According to USCIS, investors can retain their eligibility after the termination of their regional center or debarment of their NCE or JCE either by notifying USCIS that they continue to meet eligibility requirements notwithstanding the termination or debarment, or by amending their petition to meet the requirements.
Pre-RIA investors may remain eligible if their project is complete or will be completed in accordance with the comprehensive business plan, with sufficient job creation for all investors. The investor’s capital must be sustained through the requisite two-year sustainment period. In such cases, USCIS may determine that a pre-RIA investor associated with the terminated regional center remains eligible even without the need to reassociate with another approved regional center or make a qualifying investment in another NCE. Also, regional center termination will not be considered a material change that affects the investor’s eligibility.
Investors who filed I-526E petitions post-RIA may continue to be eligible if their investment was sustained for at least two years after being placed at risk and satisfied the job creation requirement before termination or debarment. In such cases, USCIS may determine that investors remain eligible even though the regional center was terminated, without the need to reassociate with another approved regional center or make a qualifying investment in another NCE.
However, both pre-RIA and post-RIA investors will not remain eligible if their regional center is terminated, their NCE or JCE is debarred, and their project failed or did not create the required jobs. They may amend their petition to retain eligibility through their NCE reassociating with an approved regional center or by making a qualifying investment in another NCE to ensure that job creation requirements are met.
With the above guidelines, good-faith EB-5 investors now have better chances of getting their Green Cards and their invested capital back in case their regional center, NCE, or JCE gets sanctioned by USCIS. However, USCIS guidance makes it clear that any investor who was a knowing participant in the fraud or misconduct that led to the termination or debarment may not benefit from these provisions.
Contact EB5AN to Know More About EB-5 Regulations
USCIS guidance updates give investors much-needed clarity on EB-5 regulations to understand how certain circumstances can impact their case. The process, however, remains complex and is best navigated with professional guidance. Investors must conduct thorough due diligence before investing and work with trusted regional centers to avoid any setbacks.
As a leading regional center operator, EB5AN can simplify your EB-5 journey by assisting you through the regulatory landscape and providing you with the best solutions for your needs.
If you’d like to know more about EB-5 guidelines, book a free call with our expert team today.
