FICTION
FACT
(cont.)
EB-5 investors are subject to significant scrutiny throughout the EB-5 process from the USCIS—
which is itself run by the Department of Homeland Security (DHS).
The EB-5 vetting process includes the most detailed and thorough review of the immigrant of any visa category. The process includes a comprehensive review of the documentation of a legal source for the investor’s funds, in addition to background checks, in-person
interviews, health and biometrics. Moreover, this detailed review occurs twice in the process,
once upon application for conditional residency, and then again two years later at the removal
of conditions phase.
In addition, investors are subject to Office of Foreign Asset Control (OFAC) requirements.
EB-5 enables money-laundering.
In addition to the detailed source of funds review performed by DHS, the U.S. banking system is
regulated to ensure that money laundering does not occur and to identify potential threats.
U.S. banks accepting foreign funds must comply with Know-Your-Customer (KYC), AntiMoney Laundering (AML), and Bank Secrecy Act (BSA) requirements.
EB-5 developers “gerrymander”
census tracts to allow projects in
affluent areas to qualify as high
unemployment areas for EB-5.
Though projects in economically prosperous areas may not seem to meet Targeted Employment
Area (TEA) criteria, these projects typically draw workers from nearby high unemployment areas.
When taking into account commute patterns, these projects create jobs for high
unemployment communities—just as the statute intended. Linking together census tracts is a
commo n practice used by the Bureau of Labor Statistics to evaluate employment regions and
statistics for the federal government.
Industry Norms Surpass Regulatory Requirements
A report released in August 2015 by the Government
Accountability Office (GAO) has raised concerns for many
regarding the USCIS’ ability to reliably oversee the EB-5
program.
The information in the report indicates that the USCIS
lacks the capacity to reliably verify EB-5 investors’ source
of funds, an EB-5 project’s receipt of the investment, or the
project’s information itself—key components of meeting EB-5
program requirements.
Additionally, the report noted that USCIS fails to track
investor and regional center data accurately. The report stated
that USCIS “databases have limitations that reduce their
usefulness for conducting fraud-mitigating activities”; tracking
information “such as the applicant’s name, address, and date
of birth” is considered “unnecessary”; and data fields are not
standardized to enable basic search functionality.1 Because
EB-5 program data is not readily available, the USCIS’ fraud
detection unit has been unable to develop a strategy for
assessing fraud risk, and instead relies on random site visits.2
However, bureaucratic challenges in the program’s administration do not reflect the true nature of the EB-5 market.
Where the USCIS has failed, the EB-5 industry itself has
stepped up, setting high standards for security, transparency,
and compliance.
Not only do EB-5 issuers perform due diligence on a
project’s potential investors, as more and more projects have
flooded the investor market, investors have become more
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