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Major Regulatory Changes Will Happen Soon In US EB-5 Program

US EB-5 Program

In the U.S., the Office of Management and Budget concluded the draft review regarding new directives for the EB-5 program, on June 27, 2019. It is a step in the process of regulation prior to their becoming effective.  The EB-5 industry and the investors, get the notice that the date of regulatory changes is fast approaching.

Developments of OMB review

After OMB finishes its review, the regulatory agency will put them out in the Federal Register as the Final Rule. The public gets 30 days - 60 days for getting ready prior to the regulations taking effect.

The process of these regulations began in January 2017.  There were 300 public comments saying that the rules were unworkable, and required modifications. Until the Rule is circulated in the Federal Register, its contents are not known. There is a likelihood of an increase in EB-5 investment entry limit and requirements in the designation of Targeted Employment Area will also change.

Initial regulations aimed to increase the minimum investment of the investors, to $1.35 million from $500,000 for investing in TEA. In the non-TEA investments it was $1.8 million from $1 million. The second change proposed the transfer of authority of the designate TEA, to the federal Department in Washington from the respective state governments.

Criticism of the original draft

The proposed regulations were delivered finally to OMB in Feb 2019.  There was ruthless criticism of the unique first draft of EB-5 regulations.  The Final Rule will see that designation of TEA becomes the job of USCIS.

The House has passed Bill 1044 addressing the issue of waiting lists for visa categories based on employment. The Act eliminates the 7% cap on the countries, which was present in the EB-5 Green Cards. In case of passage of the bill by the Senate, there will be an impact on EB-5 investors. These are:

  • EB-5 Chinese investors will have a reduction of 3-5 years in the waiting time.
  • Indian investors with dates of 2017 will not see a major change; but the waiting time for Indian investors with 2018-19 priority dates will increase by 3-4 years.
  • The waiting time for EB-5 investors of other countries with their set of dates falling after 2017, will increase by 3-5 years.
  • Future EB-5 investors from all countries filing after implementation date will have a waiting period of 7-8 years.
  • The EB-5 industry will gradually slow down owing to the increase in processing time.

All investors will have to face a harsh reality of enlarged waiting times and more investment amounts. Changes are thus imminent to EB-5 program.

There will be a great need of experience and expertise to meet the EB-5 requirements. Investors must also be diligent in their investment options. Investors must act now and consider the program, before any changes come through, and make a heavy impact on new investors.  They must remain informed, and work accordingly, besides planning ahead.

There is a beneficial impact of HR1044 for Chinese EB-5 investors, but there will be no major impact on new Indian- EB-5 investors. Their waiting lists long need improvements.

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