census tract of its location . Unlike the previous law , the local governments are no longer authorized to designate a location TEA . That decision will be centralized and made by the United States Citizenship and Immigration Services ( USCIS ).
Let ’ s explore :
• benefits for both the investor and the issuer of the new act and ,
• expectations from the EB-5 industry to comply with this new standard
• expectations of USCIS to clear the accumulated backlogs in processing existing and future petitions
BENEFITS OF THE EB-5 REFORM AND INTEGRITY ACT
Perhaps , the most significant benefit of the new program is the long-term reauthorization through Sept . 30 , 2027 . In the last few years , we had a few times a year the possibility that the program might not get extended or that the required minimum investment amount might increase . While that fueled an upward spike in the number of applications before each potential termination date of the program , it has not been healthy for the industry . All of the EB-5 stakeholders got frustrated . The trust in the program was rapidly declining . The program almost halted with the increase in the TEA-eligible investment amounts , from $ 500,000 to $ 900,000 . While we had thousands of applicants annually before the raise , applications declined to hundreds after the raise . 3 The courts ruled the raise unlawful , and the required minimum investment amounts reverted to pre- November 2019 levels before the raise . However , the industry learned the hard way that the lawmakers , for the most part , were in favor of it . The program went on a lapsed mode for almost nine months . Now that we have new legislation , this is our chance to implement the lawmakers ’ intent .
For example , by demanding that RCs be subject to USCIS audits at least every five years , Congress wants to ensure that they adhere to their responsibilities . In addition , the law mandates USCIS to investigate and monitor RCs and all the other parties to a transaction , including new commercial enterprises , jobcreating entities , alien investors and their alien spouses , and alien children . The bill establishes the EB-5 Integrity Fund to ensure adequate funding for these enforcement activities .
USCIS will now learn about the foreign migration agents who might be direct or third-party promoters of the EB-5 projects . US broker-dealers are already under the supervision of US regulators such as the Financial Industry Regulatory Authority ( FINRA ) and the U . S . Securities and Exchange Commission ( SEC ). As long as USCIS publishes guidelines on how they plan to regulate them , there is no question they will gladly comply . Lastly , in this integrity measures category , the role of the mandated Fund Administrator is very significant . No money transfers will be allowed without proper documentation . The
" Perhaps , the most significant benefit of the new program is the longterm reauthorization through Sept . 30 , 2027 "
Funds Administrator will verify that the transfer complies with all governing documents , including organizational , operational , and investment documents .
The integrity measures and the required periodic RC audits reveal the lawmaker ’ s intent in the new law . Most RC investors who want a green card are passive and rely on the expertise of the project sponsor to create the requisite jobs and preserve their capital .
The lawmakers want to ensure that the RC professionals assume this responsibility seriously . There is still the requirement of the investor capital to be at risk . If the investor is provided full disclosure on the risk and makes an educated decision that they want to proceed with the investment , the law permits it under the RC program . The contents of the Private Placement Memorandum ( PPM ) and professional studies like economic reports and business plans , necessary in its creation , provide full disclosure of such risks . Even though the law does not explicitly state this , direct investments , on the other hand , are more suitable for investors who want to run their projects and be actively involved . For ease of implementation , Congress disallowed all direct pooled investments . Their purpose was to protect these passive investors through the new controls in place of the RC program . We cannot
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