EB-5 Program Integrity Measures

Before the EB-5 Reform and Integrity Act, the EB-5 program operated under a framework that relied heavily on self-reporting by regional centers and individual due diligence by investors. USCIS had limited resources dedicated to program oversight, and enforcement actions were infrequent. Several high-profile fraud cases exposed the weaknesses of this model, including instances where investor capital was misappropriated before project construction began.

The RIA enacted a comprehensive integrity framework across Sections 104 and 105 of the legislation. This framework established a dedicated funding mechanism (the Integrity Fund), imposed new compliance obligations on regional centers and their principals, required third-party administration of investor funds, mandated background checks and sanctions screening, and gave USCIS formal enforcement tools including termination authority and debarment powers.

The shift represents a fundamental change in the government’s approach to EB-5 oversight. Rather than relying on investors and their counsel to identify problems, the federal government now has the resources and authority to actively monitor regional center operations, audit financial records, conduct site visits, and take enforcement actions when compliance deficiencies are identified.

Section 104 of the RIA established the EB-5 Integrity Fund as a dedicated funding mechanism for program oversight. The fund is financed entirely by annual fees paid by regional centers, creating a direct link between the industry and the resources available for its regulation.

The fee structure is tiered based on the number of investors associated with each regional center:

The fund supports several categories of oversight activity. USCIS uses the revenue to conduct compliance audits of regional center financial records, perform site visits to verify that projects are operating as described in offering documents, investigate reports of fraud or material misrepresentation, and pursue enforcement actions against non-compliant entities.

Before the RIA, EB-5 oversight was funded through general USCIS filing fee revenue. This meant that program integrity activities competed with other agency priorities for resources. The dedicated funding model ensures that oversight capacity scales with the size of the program and is not subject to the same budgetary pressures that limited pre-RIA enforcement.

Regional centers that fail to pay the required annual fee face consequences including the inability to file new petitions on behalf of investors and potential termination of their regional center designation.

Section 105 of the RIA imposed extensive new compliance obligations on regional centers. These requirements represent the most significant increase in regulatory burden on EB-5 intermediaries since the program’s creation in 1990.

• •Annual certifications. Regional centers must submit annual certifications to USCIS confirming compliance with all program requirements. Certifications must include audited financial statements prepared by an independent certified public accountant, a description of all pending litigation involving the regional center or its principals, and a detailed accounting of all investor funds received and deployed.
• •Source of funds diligence. Regional centers must conduct their own review of the lawful source of each investor’s capital, separate from and in addition to the USCIS adjudication process. This includes documenting the origin, path, and transfer of funds, and maintaining records available for USCIS inspection.
• •Sanctions screening. Regional centers must screen all investors and their associated parties against the Office of Foreign Assets Control (OFAC) Specially Designated Nationals list and other applicable sanctions databases. This screening must be conducted at the time of investment and on an ongoing basis.
• •Securities law compliance. EB-5 offerings are securities under federal law. The RIA codified the requirement that regional centers and their associated entities comply with all applicable federal and state securities regulations, including registration requirements or applicable exemptions, disclosure obligations, and investor suitability standards.

Failure to meet any of these requirements can trigger enforcement actions, including notices of intent to terminate, suspension of new petition filings, and referral for criminal investigation in cases involving fraud or willful non-compliance.

The RIA established specific requirements for the handling of investor capital, addressing one of the most significant vulnerabilities in the pre-RIA program. Several of the most damaging EB-5 fraud cases involved the commingling or misappropriation of investor funds before projects were underway.

• •Third-party fund administrators. Regional centers must use independent, third-party fund administrators for the collection, holding, and deployment of investor capital. The administrator must be a licensed and regulated financial institution that is independent of the regional center and its principals.
• •Separate accounts. Investor capital must be held in accounts that are separate from the operating accounts of the regional center, the new commercial enterprise (NCE), and the job-creating entity (JCE). This separation ensures that investor funds cannot be used for general business expenses or transferred to unrelated ventures.
• •Restrictions on commingling. Funds from different EB-5 offerings may not be commingled, and investor capital may not be mixed with non-EB-5 funds. Each offering must maintain its own segregated account with clear records of all deposits, transfers, and disbursements.
• •Escrow requirements. Investor funds must be held in escrow until specific conditions are met, such as USCIS approval of the investor’s I-526E petition or other milestones defined in the offering documents. The escrow arrangement must provide for the return of funds to investors if the conditions are not satisfied within the specified timeframe.

These provisions collectively create multiple layers of protection between investor capital and the risk of misappropriation. The independent fund administrator serves as a checkpoint on all fund movements, and the account segregation requirements ensure that investor capital can be traced and accounted for at all times.

The RIA gave USCIS a formal enforcement toolkit for addressing non-compliance. Before the legislation, the agency’s primary remedy was to deny individual petitions or to terminate a regional center designation, with limited intermediate options.

• •Notice of Intent to Terminate (NOIT). When USCIS determines that a regional center has failed to meet compliance requirements, it issues an NOIT, which begins a formal administrative process. The regional center has the opportunity to respond, submit evidence of compliance or corrective actions, and contest the findings. If the issues are not resolved, USCIS proceeds to terminate the designation.
• •Compliance reviews. USCIS conducts compliance reviews using Integrity Fund resources. These reviews may be triggered by annual certification deficiencies, investor complaints, referrals from other agencies, or as part of routine monitoring. Reviews may include document requests, interviews with principals, and on-site inspections.
• •Debarment authority. The RIA authorizes USCIS to debar individuals from participation in the EB-5 program. Debarment prevents the individual from serving as a principal, agent, or representative of any regional center, NCE, or JCE. Grounds for debarment include criminal convictions, securities violations, and a pattern of non-compliance with program requirements.
• •Consequences for non-compliance. Beyond termination and debarment, USCIS may suspend the regional center’s ability to file new petitions, deny pending petitions associated with the non-compliant entity, and refer cases to the Department of Justice or the Securities and Exchange Commission for criminal prosecution or civil enforcement.

The RIA established comprehensive background check requirements for individuals involved in EB-5 offerings. These provisions address the risk that individuals with criminal histories or prior program violations could continue to participate in the EB-5 program through new entities.

Background checks apply to the principals of three categories of entities:

• •Regional centers. All individuals who serve as owners, officers, directors, or persons in a position of significant authority within a regional center must undergo and pass background checks.
• •New commercial enterprises (NCEs). Principals of the NCE, which is the entity that receives the EB-5 investment capital, must also pass background checks.
• •Job-creating entities (JCEs). Principals of the JCE, which is the entity that uses the invested capital and creates the qualifying jobs, are subject to the same requirements.

Criminal bars to participation include convictions for fraud, deceit, or misrepresentation in connection with any immigration benefit; money laundering; conspiracy to commit any of the foregoing offenses; and certain other felony convictions. Individuals subject to these bars may not serve in any capacity with a regional center, NCE, or JCE.

The background check requirement is not a one-time event. Regional centers must notify USCIS of any changes in their principal personnel and must ensure that new principals undergo and pass the required checks before assuming their roles. USCIS may also conduct periodic re-screening as part of its compliance review process.

The integrity measures collectively provide EB-5 investors with significantly more structural protection than existed under the pre-RIA framework. However, these protections supplement rather than replace the need for thorough individual due diligence.

The key investor protections include:

• •Capital protection. Third-party fund administration and escrow requirements mean that investor capital is held by an independent entity and cannot be accessed by the regional center or project developers until specific conditions are met.
• •Ongoing monitoring. USCIS site visits and compliance reviews provide a level of ongoing federal oversight that did not exist before the RIA.
• •Personnel screening. Background checks on principals reduce the risk that individuals with histories of fraud or mismanagement are involved in the project.

When conducting due diligence on a potential EB-5 investment, investors and their counsel should verify the following:

• •The regional center’s designation is current and has not been the subject of a Notice of Intent to Terminate.
• •Annual certifications have been filed on time and accepted by USCIS.
• •A licensed, independent third-party fund administrator is in place.
• •Investor funds will be held in a segregated escrow account with clearly defined release conditions.
• •The offering complies with applicable federal and state securities laws.

Red flags that warrant additional scrutiny include: a regional center that has received an NOIT or is under investigation; principals with prior involvement in terminated regional centers; offerings that do not use a third-party fund administrator; and any resistance to providing audited financial statements or detailed fund flow documentation.

Reform and Integrity Act (Section 104, 105) | Full section-by-section analysis of the RIA.

Integrity Fund Data | Published data on Integrity Fund collections and expenditures.

Regional Center Data | Active and terminated regional center designations.

Due Diligence Scorecard | Interactive tool for evaluating EB-5 project integrity indicators.