EB-5 and Its European Counterpart Subject to Expected Changes, Oversight
In June 2018, Congress held a hearing on “Citizenship for Sale: Oversight of the EB-5 Investor Visa Program.” The current EB-5 program allows wealthy individuals to apply for and obtain green cards by investing anywhere from $500,000 to $1,000,000 in U.S. enterprises. Like any other green card holders, after five years, the beneficiaries can apply for citizenship. The title of the hearing reflected Congress’ concerns about EB-5 program: fraud, abuse, and national security risks related to the program. At that hearing, L. Francis Cissna, Director of USCIS, explained that legislative reform was necessary, but in the meantime USCIS was taking steps to improve the integrity of the program:
- Using the Fraud Detection and National Security Directorate (FDNS) to visit project sites;
- Expanding security checks;
- Partnering with the SEC, FBI and ICE;
- Publishing revised forms to improve vetting;
- Creating a Compliance Division to review annual certifications of regional centers; and
- Publishing regional center termination notices.
On the other side of the Atlantic, the European Commission has expressed similar concerns about lack of oversight. It is planning to establish a team to review the risks associated with “citizenship-by-investment” plans throughout the EU. Similar to the EB-5 program, these programs actually provide European passports to wealthy individuals from anywhere in the world in exchange for hefty investments. Having these passports can provide individuals with free movement and work authorization throughout much of Europe as well as visa waiver travel to the United States. The identified problem is that these “golden visa” programs are regulated inconsistently at the country level and, like the EB-5, can become vehicles for fraud such as money laundering and tax evasion.
A year before Director Cissna’s testimony, USCIS published a Notice of Proposed Rulemaking regarding the EB-5 program. The rule languished awaiting assessment by the Trump Administration, but on February 22, 2019 a final regulation was sent to the Office of Management and Budget (OMB) and is now pending review. That means that the rule might become effective within the next three to four months. Subject to the publication of the final rule, the expected changes include:
- Raising minimum investment amounts from $1 million to $1.8 million for standard direct investment and from $500,000 to $1 million for targeted employment areas;
- Allowing certain EB-5 petitioners to retain older EB-5 priority dates; and
- Changing the designation process for targeted employment areas.
The increase of investment amount and the silence on the reduction of current processing times and the extremely long visa number availability backlogs appear to discourage investment. Meanwhile, the European Commission expects to publish a report by the end of 2019 with the hope of developing more consistency among the member states so that “[t]here should be no weak link in the EU, where people could shop around for the most lenient.”