On December 12, 2013, the Office of the Inspector General (“OIG”) for the Department of Homeland Security (“DHS”) released a long awaited report analyzing the United States Citizenship and Immigration Services (“USCIS”) administration of the EB-5 Regional Center program.
The report contains four recommendations of which USCIS concurred with three.
“Update and clarify the Federal regulations to:
- provide the U.S. Citizenship and Immigration Services with the authority to deny or terminate EB-5 regional center participants at any phase of the process when identifying known connections to national security and/or fraud risks without compromising any ongoing or potential investigation;
- make explicit that fraud and national security concerns can constitute cause for revocation of regional center status under 8 CFR § 205.2;
- give the U.S. Citizenship and Immigration Services the authority to verify that the foreign funds were invested in companies creating U.S. jobs; and
- ensure requirements for the EB-5 regional center program are applied consistently to all participants.”
Analysis: USCIS agreed to promulgate an interagency regulation within 9 months to address these OIG concerns. This is contrary to the general practice at USCIS of issuing guidance as opposed to published regulations. It will be important for stakeholders to participate fully in the notice and comment process while this regulation is being shaped.
“Develop memoranda of understanding with the Departments of Commerce (“DOC”) and Labor (“DOL”), as well as the Securities and Exchange Commission (“SEC”) to provide expertise and involvement in the adjudication of applications and petitions for the EB-5 regional center program.”
Analysis: USCIS agreed that within 6 months, it will develop and implement an interagency collaboration plan. This will involve input and collaboration between USCIS, the Department of Commerce and the Securities and Exchange Commission.
“Conduct comprehensive reviews to determine how EB-5 funds have actually stimulated growth in the U.S. economy in accordance with the intent of the program. If necessary, employ other specialists or work with other Federal agencies to assist and confirm the results.”
Analysis: USCIS disagreed with this point and does not feel that it is the obligation of the agency to gauge the impact of the program on the U.S. economy.
“Establish quality assurance steps to promote program integrity and ensure that regional centers comply with the Code of Federal Regulations requirements.”
Analysis: USCIS agreed with this point and will, within a six-month period, establish new guidelines and structures to address program integrity and compliance issues.
We will provide a broader analysis of this report dealing with, among other things, the impact on the EB-5 Regional Center program, the impact on current immigration law reform efforts and the impact on the stakeholder community.