The EB-5 Immigrant Investor Program is considered one of the fastest and easiest ways for foreign nationals to permanently immigrate to the United States. The program was created in 1990, and it offers foreign investors the chance to receive U.S. green cards for themselves and their eligible family members in exchange for a qualifying investment in an EB-5 project. Although the program offers significant benefits to the U.S. economy, it faces many challenges, from U.S. senators attempting to smear the program with false claims of fraud to the unprecedented number of EB-5 regional center terminations in 2020. If the EB-5 program is to continue to function effectively, legislation reform and a better image in the press are essential.
The program has the ability to appeal to both political parties, which is clearly demonstrated by the bipartisan partnership of Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT), who banded together to promote and improve the EB-5 program. In an attempt to optimize EB5 investments and the program’s benefits to the United States, Senator Grassley introduced Bill S.2540 to the Senate, sponsored by Senator Leahy.
What Is Bill S.2540?
Bill S.2540 is also known as the EB-5 Reform and Integrity Act of 2020. The bill aims to increase the efficiency of the EB-5 program in many ways, including reauthorizing the EB-5 Regional Center Program through 2025 and strengthening the program’s integrity by implementing stricter regulations to combat fraud. Such measures could help improve the program’s image while also offering more protections for EB-5 investors and regional centers.
Extension of the EB-5 Regional Center Program through 2025
Investing in an EB-5 project through an EB-5 regional center is much more popular than making a direct investment due to the many benefits that come along with regional center investment. EB-5 investors who choose this route are not responsible for the same managerial duties as those who invest directly, and they enjoy a relaxed job-creation requirement. These benefits, combined with the guidance of EB-5 regional center professionals, make it much easier for investors to complete a successful EB5 investment and qualify for a U.S. green card.
However, the EB-5 Regional Center Program is by no means permanent. It is not likely that the program will end anytime soon, but it is frequently re-evaluated and typically only authorized for periods of one year or less. Bill S.2540 would extend the EB-5 Regional Center Program through 2025, ensuring under law that the program remains for a significant period.
Increased Fraud Prevention Measures for Regional Centers
Fraud is extremely rare in the EB-5 program, but unfortunately, it does occasionally crop up. This bill takes measures to prevent fraud in the program by requiring 10% of the created jobs used toward the job-creation requirement be direct jobs. In other words, at least 10% of the jobs must be created by the new commercial enterprise (NCE) itself. Additionally, this bill would require regional centers to be subject to audits every five years.
Bill S.2540 would also require regional centers to submit project-specific business plans along with their I-924 petition. As of January 4, 2021, it is not required of regional centers to submit project-specific business plans. If a regional center does opt to include one, the project can receive exemplar status, which can accelerate the I-526 petition process for any EB-5 investors who choose to invest in said project.
Going one step further to prevent fraud, the bill also includes “bona fide requirements” for EB-5 regional center involvement. These requirements prohibit anyone who has previously committed fraud offenses, received an adverse order from a financial regulator, or been listed, reprimanded, or disciplined for fraud from working with an EB-5 regional center. Anyone who is prohibited from immigration to the United States is also not allowed to work with an EB-5 regional center.
Offering an Extension for Job Creation
As of January 4, 2021, the EB-5 program grants EB-5 investors a two-year investment period for their project to create the required 10 new full-time jobs for U.S. workers. Usually, this is enough time for an EB-5 investment to achieve the stipulated requirements, but some investors do fall short. The bill would help by offering investors an extra year to satisfy the job-creation requirement. If an investor chose to use this extension, they would need to continue to maintain their EB-5 investment capital “at risk” during the extended investment period.
A Solution to Slow Processing Times
Although the EB-5 program is still considered one of the fastest ways to immigrate to the United States, it’s no secret that EB-5 investors can be subject to unreasonably long wait times during the EB-5 process. United States Citizenship and Immigration Service (USCIS) historically has a bad track record when it comes to EB-5 petition processing times, which has led many foreign investors to opt for investment programs in countries like Canada or Australia instead of the United States.
This is one more problem that this bill tackles to improve the efficiency of the EB-5 program. Bill S.2540 would grant USCIS one year to coordinate a fee study. After that year, USCIS would be required to set its fees at the necessary rate so that petitions could be processed in the following time frames:
- Regional center designations and exemplar applications should be processed in 180 days
- Regional center designations and exemplar applications in targeted employment areas (TEAs) should be processed in 90 days
- EB-5 investor petitions should be processed in 240 days
- EB-5 investor petitions in TEAs should be processed in 120 days
Optimizing the EB-5 Program
There is still no way of knowing whether the EB-5 Reform and Integrity Act of 2020 will pass or not. However, prospective EB-5 investors should keep an eye on the bill because if it does pass, it will bring many positive changes to the EB-5 program. The proposed changes in Bill S.2540 could be exactly what the program needs to optimize its ability to boost the U.S. economy and spark new interest in the program from foreign nationals.