The EB-5 Reform and Integrity Act of 2022 (“RIA”) requires Regional Centers to file annual statements with U.S. Citizenship and Immigration Services (“USCIS”). The statements cover a range of matters, from the use of EB-5 investment funds to the status of projects sponsored by the Regional Center.
Regional Center Annual Statements
A Regional Center’s annual statement must include certifications that it has complied with certain requirements under the RIA. It must also disclose any material litigation or bankruptcy proceedings involving the Regional Center, a New Commercial Enterprise (“NCE”), or an affiliated Job-Creating Entity (“JCE”).
Much of the annual statement concerns the investments themselves. Regional Centers must account for investor capital, explain how that money has been used, and provide evidence of progress on each investment project (“Project”). This includes reporting the number of direct jobs created or preserved and providing evidence that the investment capital has been committed to the Project.
Another requirement concerns fees. Regional Centers must disclose fees collected from investors, including administrative fees, commissions, and similar payments. The statement must identify who received the fees and what they were collected for.
Regional Centers must also describe their policies and procedures for complying with applicable federal labor laws.
Sanctions for Noncompliance
Failure to file an annual statement can result in sanctions. A Regional Center may also be sanctioned for knowingly submitting materially false information or for operating outside the terms of its designation. One example is a willful, undisclosed, and material departure from a business plan previously filed with USCIS.
The penalties depend on the seriousness of the violation. A Regional Center may be fined up to 10% of the EB-5 capital invested in the NCEs or JCEs directly involved in the violation. Those fines cannot be paid from investors’ capital.
USCIS may also temporarily suspend a Regional Center from the program or terminate its designation altogether. Certain individuals or business entities associated with a Regional Center, NCE, or JCE may be permanently barred from participating in the program.
Availability of Annual Statements to Investors
An EB-5 investor may request a copy of the annual statement filed by the Regional Center in which they invested.
The RIA requires the Regional Center to provide a copy of that statement, along with any amendments filed, within 30 days of receiving the request.
The Regional Center must redact any information that does not relate to the requesting investor or the NCE or JCE in which the investor invested.
For investors, this means they can request the information their Regional Center has reported to USCIS about their investment and the related project, rather than relying solely on updates provided by the Regional Center.
This is part of a series on the EB-5 Reform and Integrity Act of 2022. To read more in this series, click here.