United States Citizenship and Immigration Services (USCIS) processes and adjudicates hundreds of I-526 petitions every fiscal year. Processing data on Form I-526 — and every form administered through USCIS — is released each fiscal quarter as well. Looking at the processing data on Form I-526 from 2015 through 2017 we can see a clear spike in denials in 2016. In FY2015 the overall denial rate was 10%, which jumped to a denial rate of 18% in FY2016, then fell back down to a rate of 7% in 2017. So what caused this spike in I-526 denials?
In general, USCIS will approve an I-526 petition if it is fully compliant with EB-5 laws and regulations. Therefore, an increase in denials in a given time period is likely due to a higher number of noncompliant petitions being adjudicated. Although USCIS releases statistics on denials, it does not break down the reasons for denials (i.e., source of funds not clear, not a new enterprise, etc.).
Although there was no singular cause for the spike of I-526 petition denials in 2016, we can pinpoint certain contributing factors. For example, the USCIS change in policy when adjudicating an investor’s source of funds originating from a loan. For many years, investors were permitted to secure a loan by a relative’s property as long as that relative gifted the use of the real property as collateral for the loan. After the policy change, USCIS consistently denied I-526 petitions throughout 2015 and 2016 where the investor did not wholly own the real property used to collateralize the loan. Additionally, USCIS had been reaching further back in time when issuing requests for evidence (RFE) on the source of funds; sometimes requiring employment and asset information from 20 to 30 years prior.
While the rise in I-526 petition denials was not due to a single root cause, the aforementioned USCIS policy change and increased scrutiny surrounding source of funds likely contributed to the spike. This highlights the importance of providing thorough and extensive source of funds documentation. EB-5 investors are advised to consult with an EB-5 immigration attorney to assist with this process, avoid RFEs, and minimize the chance of petition denial.
