WHAT ANTI-MONEY LAUNDERING EFFORTS MEAN TO EB-5 ATTORNEYS
The developing regulatory environment means that lawyers and EB-5 investors face more stringent oversight .
By Natalia Polukhtin
I n recent years , corporate transparency
and anti-money laundering measures became an integral part of the EB-5 industry narrative . About two years ago , the EB-5 Reform and Integrity Act of 2022 ( RIA ) imposed heightened standards for demonstrating a lawful source of funds ( SOF ), including mandatory disclosure of the identities of all third parties contributing to or facilitating a transfer of the investment capital . i Early in 2024 , the Corporate Transparency Act ( CTA ) came into effect , impacting many businesses throughout the United States and creating additional disclosure and reporting obligations for immigrant investors and their representing counselors .
However , the significance of substantive changes in the due diligence and reporting obligations of participants in the EB-5 investment process should not overshadow another source of increase in the evidentiary burden of immigrant investors ’ cases : the new provisions for regulating attorneys ’ professional conduct .
The pressure for greater oversight of lawyers , especially regarding money laundering , has evolved over the recent decade . In 2016 , the Financial Action Task Force ( FATF ), an international organization coordinating anti-money laundering ( AML ) and anti-terrorism financing efforts , found the U . S . falling short in several areas , including inadequate client due diligence by lawyers . ii Remarkably , in the apparent effort to address the same concern , the “ Money Laundering , Terrorist Financing and Transfer of Funds Regulations 2017 ” was implemented in the UK , outlining the obligations of legal service providers , from sole practitioners to large international firms , in conducting clients ’ due diligence . iii Congress has also tried unsuccessfully to address the issue with the ENABLERS Act in 2022 , which aimed to regulate law firms under the Bank Secrecy Act similarly to financial institutions . It would have included requirements like filing Suspicious Activity Reports on clients ’ financial dealings .
Recent corruption scandals , such as the Paradise Papers , Panama Papers , Pandora Papers , and FinCEN Files , have also indicated more regulation demand . Also , there are cases
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