U.S. lawmakers once again are attempting to reshape the EB-5 Immigrant Investor Program, addressing flaws that open the door for fraud and abuse. On March 18, Sens. Patrick Leahy (D-Vermont) and Chuck Grassley (R-Iowa) introduced the EB-5 Reform and Integrity Act of 2021. The primary focus of the legislation addresses fraud and national security weaknesses within the EB-5 Regional Center Program. Lawmakers contend the program has been abused and exploited for years.
Created by the U.S. government in 1990, the EB-5 Immigrant Investor Program encourages foreign investment in American businesses thus creating jobs for U.S. workers. In exchange for their investment, foreign nationals along with their families become eligible for green cards in establishing permanent U.S. residency.
Brought economic stimulation, but flawed
Through the years, the EB-5 Immigrant Investor Program has created jobs and boosted economic development. U.S. lawmakers noted that from 2008 to 2015, the EB-5 Regional Center program helped bring $20.6 million in economic investments to the country, while saving and creating nearly 732,000 jobs.
However, U.S Congress members contend that a slew of abuse has plagued the program. They cite that foreign investors exploited the program to quickly secure green cards, and U.S. developers manipulated foreign investors in obtaining cash for sham projects.
The new legislation would address oversight issues and improve accountability. For example, new disclosure requirements for EB-5 regional centers would protect investors. In addition, the centers must certify their compliance with the new rules. Also, the centers will receive regular audits and site visits from Department of Homeland Security officials. The new legislation also reauthorizes the program, which is due to expire at the end of June.
This is not the first time that U.S. Congress has attempted to clean-up the EB-5 program. Global businesses including those in China continue to pay close attention to these developments.