HOW NEW COMMUNIST AND TOTALITARIAN PARTY“ MEMBERSHIP” RULES COULD RESHAPE EB-5 RISK ANALYSIS— BY ALEX GEORGE SANTHANAM AND HALSTON CHAVEZ
the capacity for affirmative and intentional action.” Now, that list has been narrowed to“ fraud or duress, or occurred without the applicant’ s knowledge.” The Department of State requires applicants to demonstrate, through clear and convincing evidence, that their membership was not voluntary at any point in time.
• Failure to disclose membership can have severe consequences. The old FAM allowed consular officers to obtain missing information from applicants during the immigrant visa interview, including prior party membership. Now, if an applicant does not disclose membership on their immigrant visa forms, the consular officer could find the applicant inadmissible due to“ material misrepresentation.”
THE OVERLAP BETWEEN FAM AFFILIATION RULES AND RIA CAPITAL RESTRICTIONS For EB-5 investors, the implications go beyond admissibility at the immigrant visa stage. The Reform and Integrity Act of 2022( RIA) prohibits capital from being provided by— or indirectly linked to— foreign governments or their representatives in EB-5 projects: No agency, official, or other similar entity or representative of a foreign government entity may provide capital to, or be directly or indirectly involved with the ownership or administration of, a regional center, a new commercial enterprise, or a job-creating entity, except that a foreign or domestic investment fund or other investment vehicle that is wholly or partially owned, directly or indirectly, by a bona fide foreign sovereign wealth
Many EB-5 professionals already screen for Communist Party membership. But the new FAM requires much more detailed review
fund or a foreign state-owned enterprise otherwise permitted to do business in the United States may be involved with the ownership, but not the administration, of a job-creating entity that is not an affiliated jobcreating entity.
8 U. S. C. § 1153( b)( 5)( B)( ii)( II); Pub. L. No. 117-103, Div. BB, § 101( a)( 2)( B)( ii)( II), 136 Stat. 49( 2022).
The RIA expressly directed the Department of Homeland Security( DHS) to issue implementing regulations within 270 days of enactment of the law, which would have been by December 10, 2022.3 DHS missed that statutory deadline, and as of this writing, U. S. Citizenship and Immigration Services( USCIS) has not issued guidance with respect to this provision. This regulatory gap leaves practitioners and investors with uncertainty over how the foreign government capital restriction will be interpreted and enforced.
In practice, this uncertainty highlights a potential twofold challenge: the very facts that raise concerns about political affiliation under the FAM could simultaneously complicate the investor’ s lawful source of funds.
HIDDEN PITFALLS PRACTITIONERS MUST ANTICIPATE
There are various pitfalls that practitioners should anticipate and strategies that practitioners can employ to mitigate those risks.
In many countries where the government either was previously or is currently considered Communist or totalitarian by DOS, the government is deeply embedded in the economy. Even sectors that appear private may be partly owned, managed, or influenced by the state.
Many EB-5 professionals already screen for Communist Party membership. But the new FAM requires much more detailed review— looking for indirect affiliations, ideological endorsements, and even symbolic ties. Below are some less obvious scenarios that could now present additional challenges:
• Employment in“ commercial” arms of the state. Some investors work for companies that appear private but are majority-owned by government investment vehicles. Without a careful ownership history review, practitioners may miss the risk.
• Post-service promotions. A military veteran promoted to a civilian leadership role within a state ministry may be viewed as maintaining an active affiliation.
• Party membership through family or education. In some countries, university students automatically join youth Communist organizations, which could be construed as past( or present) affiliation.
• State-connected NGOs or trade associations. Organizations presented as independent may in fact be extensions of the ruling party or government policy apparatus.
• Diplomatic or“ official” passports. Even if issued only for work travel, these can be viewed as evidence of government representative status.
• Social media activity. Investors are required to provide social media handles on their Forms DS-260. Posts, comments, and even likes could be construed as sympathy with Communist or socialist party ideology.
THE EXPANDED DUE DILIGENCE MANDATE: STRATEGIC INTAKE AND QUESTIONNAIRES To address these risks, practitioners should overhaul client intake processes. Simply asking,“ Have you ever been a member of the Communist Party?” is no longer sufficient. Instead, comprehensive questionnaires should include:
· Detailed employment mapping. For each job in the client’ s history, have them identify the employer’ s ownership at the time, including indirect ownership through state holding companies. Questions specific to service in ministries, SOEs, or quasi-governmental bodies, even in junior roles, should be included.
· Complete education history examination. For each school, request the full name of the university or college, including any former names, years attended, and degree( s) earned.
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