Due to the complex intersection of real estate, corporate, securities and immigration law (among others), an investment in a company under the EB-5 Program can be a complicated affair. One of the reasons an EB-5 investment is complicated has to do with U.S. governmental regulatory bodies with potential oversight over an EB-5 investment. The following is a non-exhaustive list of regulatory bodies in the U.S. which have oversight of an EB-5 investment.
For starters, U.S. immigration is largely regulated by the U.S. Department of Homeland Security through its sub-agency the U.S. Citizenship & Immigration Services (USCIS). When seeking benefits under the EB-5 Program, an investor will file a Form I-526, Immigrant Petition by Alien Entrepreneur (I-526), with USCIS. USCIS has a fraud detection and national security unit which can conduct site visits on an EB-5 investment and also has auditors on staff to conduct audits of an EB-5 investment or a regional center. Thus, USCIS is often the first agency to recognize issues with an EB-5 investment.
USCIS also has a memorandum of understanding with the Securities and Exchange Commission in the event USCIS suspects fraud, misrepresentation or other issues with an EB-5 investment, a principal of a regional center, or an EB-5 investor. Additionally, USCIS has a memorandum of understanding with the Financial Crimes Enforcement Network (FINCEN) in order to investigate and flag illicit use of the financial system, which can include instances of money laundering. For instance, misuse of an EB-5 investor’s funds, such as diversion through various U.S. banking institutions can raise issues that FINCEN investigates. In addition, USCIS has stated publicly that they discuss EB-5 investments with the Federal Bureau of Investigation, Immigration and Customs Enforcement and the Securities and Exchange Commission. While no system is perfect, this does help ensure EB-5 Program integrity by providing layers of security for an EB-5 investor.
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