What Is the Purpose of the EB-5 Integrity Fund Announced by DHS?
EB-5 Investor Visas
The EB-5 visa program is an investment-based immigrant visa program in the United States that allows eligible foreign investors to obtain permanent residency for themselves, their spouses, and unmarried children under the age of 21.
The program requires that investors invest at least $1.8 million, or $900,000 if the investment is made in a Targeted Employment Area (TEA), in a commercial enterprise that will create or preserve at least 10 full-time jobs for U.S. workers.
The program is administered by the United States Citizenship and Immigration Services (USCIS) and offers two pathways for investment: direct investment and investment through a regional center. Regional centers are entities designated by USCIS that promote economic growth in a specific geographic region by pooling investments from multiple investors to finance job-creating projects.
The EB-5 Integrity Fund is announced by DHS
The Department of Homeland Security has announced the establishment of the EB-5 Integrity Fund to administer the EB-5 Regional Center Program, as required by the EB-5 Reform and Integrity Act of 2022.
The EB-5 integrity fund comes with establishment of hefty fees for regional centers to be paid by October 1st.
Starting Mar. 2, and each Oct. 1 thereafter, as required by the EB-5 Reform and Integrity Act of 2022, U.S. Citizenship and Immigration Services (USCIS) will collect an annual fee from each designated regional center to finance the EB-5 Integrity Fund.
Source: USCIS
What is the annual fee for the EB-5 Integrity Fund?
The annual fee for designated regional centers will be $20,000 for those with over 20 investors and $10,000 for those with 20 or fewer investors, starting from March 2, 2023. The fee payment for fiscal year 2023 is due by April 1, 2023, and must be paid online at Pay.gov. The funds will be used to detect and investigate fraud and other immigration crimes. Non-payment of the fee within 90 days of the due date may result in termination of the regional center’s designation.
When are fees due for the EB-5 Integrity Fund?
The fee is $20,000 for regional centers with more than 20 investors and $10,000 for those with 20 or fewer investors. The first fee payment is due by Apr. 1, and regional centers must pay the annual fee online directly at Pay.gov, a system managed by the U.S. Department of the Treasury. Starting with fiscal year 2024 (October 2023), the fee will be due at the start of each fiscal year between Oct. 1 and Oct. 31.
Source: USCIS
What is the purpose of the EB-5 Integrity Fund
The purpose of the fund is very clear from USCIS guidance and language of the EB-5 Reform and Integrity Act of 2022. DHS will use the fund to investigate fraud, not less than one third of the Fund will be used to investigate activities outside of the United States, including investigations of the investors themselves.
The Secretary shall--
``(I) <<NOTE: Investigations.>> use
not less than \1/3\ of the amounts
deposited into the Fund for
investigations based outside of the
United States, including--
``(aa) monitoring and
investigating program-related
events and promotional
activities; and
``(bb) ensuring an alien
investor's compliance with
subparagraph (L); and
``(II) use amounts deposited into
the Fund--
``(aa) to detect and
investigate fraud or other
crimes;
``(bb) <<NOTE: Determination.>>
to determine whether regional
centers, new commercial
enterprises, job-creating
entities, and alien investors
(and their alien spouses and
alien children) comply with the
immigration laws;
``(cc) <<NOTE: Audits.>> to
conduct audits and site visits;
and
``(dd) <<NOTE: Determination.>>
as the Secretary determines to
be necessary, including
monitoring compliance with the
requirements under section 107
of the EB-5 Reform and Integrity
Act of 2022.
Source: EB-5 Reform and Integrity Act of 2022
Law related to EB-5 source of funds found in the EB-5 Reform and Integrity Act of 2022
Investors, attorneys and other stakeholders are advised to read the EB-5 Reform and Integrity Act of 2022 in its entirety.
(L) Source of funds.--(i) In general.–An alien investor shall
demonstrate that the capital required under
subparagraph[[Page 136 STAT. 1093]]
(A) and any funds used to pay administrative costs and fees associated with the alien's investment were obtained from a lawful source and through lawful means. ``(ii) Required information.--The Secretary of Homeland Security shall require that an alien investor's petition under this paragraph contain, as applicable-- ``(I) <<NOTE: Records.>> business and tax records, or similar records, including-- ``(aa) foreign business registration records; ``(bb) <<NOTE: Time period. Determination.>> corporate or partnership tax returns (or tax returns of any other entity in any form filed in any country or subdivision of such country), and personal tax returns, including income, franchise, property (whether real, personal, or intangible), or any other tax returns of any kind, filed during the past 7 years (or another period to be determined by the Secretary to ensure that the investment is obtained from a lawful source of funds) with any taxing jurisdiction within or outside the United States by or on behalf of the alien investor; and ``(cc) any other evidence identifying any other source of capital or administrative fees; ``(II) evidence related to monetary judgments against the alien investor, including certified copies of any judgments, and evidence of all pending governmental civil or criminal actions, governmental administrative proceedings, and any private civil actions (pending or otherwise) involving possible monetary judgments against the alien investor from any court within or outside the United States; and ``(III) the identity of all persons who transfer into the United States, on behalf of the investor, any funds that are used to meet the capital requirement under subparagraph (A). ``(iii) Gift and loan restrictions.-- ``(I) In general.--Gifted and borrowed funds may not be counted toward the minimum capital investment requirement under subparagraph (C) unless such funds-- ``(aa) were gifted or loaned to the alien investor in good faith; and ``(bb) were not gifted or loaned to circumvent any limitations imposed on permissible sources of capital under this subparagraph, including but not limited to proceeds from illegal activity. ``(II) Records requirement.--If funds invested under subparagraph (A) are gifted or loaned to the alien investor, the Secretary shall require that the alien investor's petition under this paragraph includes the records described in[[Page 136 STAT. 1094]]
Source: EB-5 Reform and Integrity Act of 2022subclauses (I) and (II) of clause (ii) from the donor or, if other than a bank, the lender.
What is the payment process for the EB-5 Integrity Fund?
Fee Payment Process
Before April 3, 2023, and between October 1 and October 31 of each following year (FY 2024 onward), each designated regional center must pay the fee to USCIS online via the online form hosted on Pay.gov at Pay.gov —EB5—Annual Fee for Regional Center. Payment of this fee must be made by an authorized individual on behalf of a regional center. Each designated regional center must pay the fee with either a valid credit or debit card or by authorizing an ACH Debit transaction where the regional center provides its U.S. bank routing and checking account numbers to have money debited directly from its U.S. bank account. Please note that the U.S. Department of Treasury guidelines permit USCIS to accept a maximum payment amount of $24,999 from one credit card in one day, and a single obligation cannot be split into multiple credit card payments over multiple days in order to evade this limit.[7]
The 2022 Act and this notice represent the constructive notice to designated regional centers of the amount they owe and when it is due. USCIS will also post information on its website and issue a press release but will not send an invoice to the regional centers beyond this notice. Each regional center is responsible for determining their amount owed based on the number of total investors and for submitting the appropriate fee before the due date. If a regional center is required to provide evidence of payment of this fee, USCIS will accept proof that the fee is paid in the form of, for example, a copy of the Pay.gov payment confirmation email or a notice or statement from the payer’s credit card issuer or financial institution.
Source: USCIS Notice 03/02/2023: https://www.federalregister.gov/documents/2023/03/02/2023-04295/notice-of-eb-5-regional-center-integrity-fund-fee
Late fee penalty and Regional Center designation termination
The United States Citizenship and Immigration Services (USCIS) will begin imposing a late fee for any payments made 30 days later than the due date, starting from October 1, 2023, as required by the new EB-5 law. However, USCIS will not impose late fees for payments due in FY 2023. The amount of the late penalty and the collection process will be announced in a future publication before it is due.
As required by the new EB-5 law, USCIS must terminate the designation of any regional center that does not pay the fee within 90 days of the due date. Termination will not be automatic, and USCIS will provide a notice of intent to terminate and an opportunity to prove that the fee was paid in the proper amount within 90 days of the due date before sending a notice of termination.
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