The U.S. Citizenship and Immigration Services (USCIS) has recently updated its policies to safeguard ‘good faith’ investors participating in the EB-5 Immigrant Investor Program. This program, established in 1990, offers a pathway to U.S. permanent residency (green card) for foreign investors who contribute to the American economy through substantial investments in commercial enterprises.

Overview of the EB-5 Immigrant Investor Program

The EB-5 program requires investors to make a minimum investment of $1 million in a U.S. business. However, if the investment is directed towards a rural or high-unemployment area, the minimum investment threshold is reduced to $500,000. This investment must lead to the creation or preservation of at least 10 full-time jobs for U.S. workers, which directly contributes to economic growth and job creation.

It is becoming increasingly popular among the Indian community, especially those currently in the U.S. on an H-1B visa who are looking for a faster path to obtaining permanent residency (green card).

The program is inclusive, allowing not only the primary investor but also their spouses and unmarried children under the age of 21 to apply for permanent residency. Investors have the option to invest directly in a business or through regional centers, which are entities designated by USCIS to promote economic growth in specific areas.

Successful applicants initially receive a conditional green card valid for two years. During this period, the investment must meet the program’s requirements, including job creation and maintaining the investment. If these conditions are satisfied, investors can then apply for the removal of conditions to obtain permanent residency.

The EB-5 program allows investors to obtain a green card by investing $800,000 in Target Employment Areas (TEAs) or infrastructure projects, or $1,050,000 elsewhere. The investment must create at least ten jobs. Investors can invest directly or through regional centers, which fund specific projects like hotels. The program has an annual cap of around 10,000 visas, with a 7% per country limit. For fiscal 2024, the cap is 9,940. The EB-5 Reform and Integrity Act of 2022 introduced reserved categories: 20% for rural investments, 10% for TEAs, and 2% for infrastructure projects.

Protecting ‘Good Faith’ Investors

The updated policies are designed to prevent ‘good faith’ investors from losing their path to permanent residency due to the misconduct of regional centers or other participants. There have been instances where investors, despite having invested substantial sums, have lost not only their investment but also the hope of obtaining a green card. These new guidelines aim to provide a safety net for genuine investors, ensuring that their efforts and investments are not in vain.

In response to various challenges and instances of misconduct within the program, the EB-5 Reform and Integrity Act of 2022 was introduced. This legislation aims to enhance transparency, compliance, and integrity within the EB-5 program. One of the key aspects of this act is the protection of ‘good faith’ investors under provisions of section 203(b)(5)(M) of the Immigration and Nationality Act (INA)—those who participate with the genuine intention of complying with EB-5 rules.

USCIS has clarified that investors who knowingly participate in fraudulent activities that lead to the termination or debarment of a regional center or new commercial enterprise (NCE) cannot benefit from section 203(b)(5)(M). However, the policy update provides options for investors to maintain their eligibility for permanent residency even if the regional center or NCE is terminated or debarred, as long as they were not involved in the misconduct.

USCIS has released a FAQ for EB-5 investors detailing the steps to take if their regional center is terminated or their new commercial enterprise (NCE) or job creation entity (JCE) is debarred. Importantly, project failure alone does not qualify investors to retain eligibility under section 203(b)(5)(M) of the INA.

USCIS states, “If you wish to have your NCE reassociate with another regional center or make a qualifying investment in NCE because of a project failure separate from termination or debarment, you must file a new petition for classification based on post-RIA eligibility requirements.”

Currently, some regional centers are being served notices for failing to contribute to the integrity fund, a crucial component of maintaining the program’s standards. The integrity fund is intended to support the enforcement of compliance, and the overall integrity of the EB-5 program. By holding regional centers accountable, USCIS aims to foster a more reliable and trustworthy environment for investors.