On Aug 25 2015 by H. Ronald Klasko

Compliance – The Key to Success in EB-5

The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.

Compliance is key to the future of EB-5. It is key to regional centers staying in business. It is key to investors being able to remain in the country. It is key to USCIS oversight of the EB-5 program. In fact, during the August stakeholders call, USCIS announced the formation of a separate compliance unit within the IPO.

The reason why compliance is so important at this time is a function both of EB-5 history and EB-5 future. Historically, only the largest and most fully-staffed regional centers have reached the I-829 processing stage. The reason is that, in order to reach that stage, a regional center must have been in business for at least 5 or 6 years. Six years ago, there were only a relatively small number of regional centers and even fewer with any active projects.

Today, with approximately 700 regional centers, many will be reaching the I-829 stage shortly and for the first time. Some of this group are not fully staffed and may not have been doing what is necessary to make certain that their investors achieve condition removal. This would be a true disaster both for the investors and the EB-5 program.

Now to the future. Pending legislation to extend the regional center EB-5 program will likely include a healthy dose of compliance requirements. Not the least of these requirements is likely to be substantially increased annual reporting by regional centers to USCIS, including annual reports on money received, how the money has been used, state of progress of the project, jobs created each year, etc. This will create far greater compliance requirements than exist presently.

These are the reasons why we created Klasko Compliance, the first full service legal compliance team in the EB-5 industry. Our team works with regional centers and project developers, not at the end of each year and not at the end of the conditional residence period, but from the time of the first investor’s investment through the time of the last investor’s condition removal. Klasko Compliance reviews the records of the regional center and/or project, spot any legal issues well enough in advance to be able to address them and eventually make the preparation of the I-829 template a straight forward process rather than a last minute panic with insufficient data or information to meet the I-829 requirements. By doing so, we will also compile the information necessary for even the most enhanced annual reporting requirements.

However, although we can provide the legal review, how is the client to provide the necessary information and track the necessary data? The answer is NES Financial. NES Financial provides the software, technology and tracking solutions to enable our clients to provide us with critical information that we need in order to perform our legal audit and to spot potential I-829 problems. NES Financial provides unique solutions in software and technology. Because Klasko Compliance provides unique solutions in legal reporting and compliance, it was only natural that we join forces in a strategic alliance to provide our clients a coordinated solution to their compliance needs. In addition to providing regional centers and project developers the peace of mind of knowing that their compliance needs are met, we believe that projects that employ our joint solution will be more marketable because overseas migration agents are very concerned that their investor clients will be successful in the condition removal process. I recently tested this hypothesis on my trip to China, and it proved to be very valid.

I recommend to the readers of this blog the following video, which outlines in more detail the reasons for the Klasko Compliance and NES Financial strategic alliance and more information about the services provided by each of our organizations: http://nesfinancial.com/ron-klasko-video/.