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USCIS Lawsuit Challenges the Validity of New EB-5 Program Rules

Regional Center Challenges the Validity of the EB-5 Immigration Investor Program Modernization Final Rule

On November 26, 2019, Florida EB5 Investments, LLC (the “Plaintiff”), filed a civil action against the Department of Homeland Security (DHS) and the United States Citizenship & Immigration Services (USCIS) (the “Complaint”) challenging the validity of the recently implemented EB-5 Immigration Investor Program Modernization Final Rule (the “Final Rule”).

Click here to download the full Complaint seeking a temporary restraining order and preliminary injunction to halt the implementation of the recently implemented Final Rule.

The Plaintiff, a regional center and participant in the EB-5 Immigrant Investor Program, contends that the Department of Homeland Security (DHS) implemented the Final Rule without considering the harmful economic effects the rule change would have. Moreover, the Plaintiff alleges that the program changes violate the Administrative Procedure Act (APA) and the 10th Amendment, and the Final Rule should thus be vacated.

The Plaintiff requests that the Court grant a temporary restraining order and preliminary injunction barring the DHS, USCIS, and the Immigrant Investor Program Office from implementing the Final Rule published in July 24, 2019, and effective from November 21, 2019. The Plaintiff further requests declaratory judgments confirming that the Final Rule is invalid, vacating the Final Rule, and confirming that it violates the APA.

Although the Final Rule introduces numerous changes, the Complaint focuses on two key revisions. The first is the significant increases in investment amounts, which rose from $1 million to $1.8 million for regular investments, and $500,000 to $900,000 within targeted employment areas (TEAs). The second relates to the changes to the TEA designation system that shift the responsibility for designation away from state agencies toward the DHS and USCIS.

The Plaintiff argues that these changes, particularly the increased investment amounts, will make the EB-5 program less attractive to investors and developers alike. According to the particulars of claim, several of the Plaintiff’s affiliates withdrew from the EB-5 program following the announcement of the Final Rule, with some completely abandoning projects. If more affiliates abandon the program, which the Plaintiff expects to happen, the Plaintiff may go out of business.

The Plaintiff further alleges that DHS and USCIS were aware of several studies on the economic impacts of the rule changes, despite their initial claim that they did not have adequate data to make an evidence-based decision. He notes that during the rulemaking process, commenters drew rule makers’ attention to several research studies conducted by reputable organizations, including the Department of Commerce, on the effects of the EB-5 program. However, DHS chose to ignore the findings of these studies when implementing the program changes, allegedly to avoid Congressional oversight of the rulemaking process. Rule changes with an effect of more than $100 million on the economy are classified as major rules, which require Congressional approval.

The studies cited in the Complaint show that in an unconstrained environment, the EB-5 program brings about extensive benefits to the U.S. economy. For example, trade group Invest in the USA (IIUSA) found that during FY2010–2011 the program contributed $2.6 billion to U.S. GDP and created or supported 33,000 jobs. The Department of Commerce’s analysis of FY2012 and FY2013 data indicated that the program created 170,000 jobs and drew $5.8 billion in capital during the study period. Similarly, Economic & Policy Resources Inc. determined that during FY2014–2015, the program provided 2% of all foreign direct investment inflows, contributed $11 billion to the U.S. economy, and created more than 335,000 jobs.

The Plaintiff’s contention that the Final Rule should be vacated is based on three allegations related to violation of the APA: (1) TheFinal Rule violates the APA because it is “arbitrary and capricious.” (2) Under the APA, the Department of Labor should have performed a Regulatory Flexibility Act (RFA) analysis to determine how the changes will affect small businesses like the Plaintiff, which is defined as a small business by the RFA and Small Business Administration. (3) “DHS’s attempts to designate TEAs exceeds its statutory authority,” as the Final Rule does not cite the statute that authorizes the DHS to designate TEAs. Although the DHS claims that its authority stems from its mission to “ensure that the overall economic security of the United States is not diminished by efforts, activities, and programs aimed at securing the homeland,” its mandate is security and protection, not promoting economic development.

The Plaintiff further argues that the Final Rule should be vacated because it violates the 10th Amendment. By shifting TEA designation from state agencies to federal government agencies, DHS limits states’ ability to “conduct their own government and foster economic development within their respective borders.”

The Complaint filed in the U.S. District Court for the District of Columbia names Chad Wolf, acting secretary of the DHS; Kenneth T. Cuccinelli, acting director of USCIS; and Edie Pearson, policy branch chief of the Immigrant Investor Program Office (the “Defendants”) in their professional capacities. The Defendants have 60 days from service of summons to respond, so we can expect an update early in 2020.

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EB-5 Updates Now in Force

In July 2019, United States Citizenship and Immigration Service (USCIS) and the Department of Homeland Security (DHS) published updates to the EB-5 visa program in the Federal Register. The new EB-5 rule, implemented to modernize the program, came into effect on November 21, 2019.

While the updates include several technical revisions, the key changes to the EB-5 visa program relate to investment amounts, the designation of targeted employment areas (TEAs), and priority date retention for certain EB-5 investors.

For the first time since the investment green card program began, investment amounts have increased. The full investment amount rose from $1 million to $1.8 million, whereas the reduced investment amount permitted when investing in projects in TEAs rose from $500,000 to $900,000. This change reflects inflation, and a framework has been introduced to facilitate subsequent inflation-based increases in investment amounts every five years.

Previously, individual states and local governments were permitted to designate high unemployment targeted employment areas. Now, USCIS directly reviews and designates these TEAs. Additionally, the rules have changed for combining census tracts to form a single TEA. Although census tracks can still be combined, the TEA must consist of only the contiguous tracts in which the new commercial enterprise will operate and any directly adjacent census tracts. Finally, the definition of a high employment TEA has changed to include areas located outside metropolitan statistical areas (MSAs).

The changes to the TEA designation process mean that EB-5 investors who claim to qualify for the lower investment amount now have to submit supporting evidence that the target project falls within a TEA—rural or high unemployment—when submitting their I-526 petitions. Furthermore, the area must meet the EB-5 green card program criteria at the time of filing the petition or at the time of making the investment. Some areas that previously qualified as TEAs will no longer qualify under the new rules, so investors must confirm TEA status when conducting their due diligence.

Finally, certain EB-5 investors will be able to retain their priority dates—the date on which they filed their I-526 petitions, which determines their place in the visa queue. This EB-5 update applies to investors whose I-526 petitions have been approved but who have not yet obtained conditional permanent residence and whose investment green cards are at risk because of material changes to their applications. The new rules allow them to file new I-526 petitions without losing their place in the visa queue.

Over the coming months the full implications of the EB-5 visa program changes will become clear when new petitions are filed—and new challenges arise. EB-5 practitioners, investors, and developers should keep up with EB-5 news to make sure they know how the implementation of the new rules will affect their participation in the EB-5 green card program.

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New Initiative Announced by EB5 Affiliate Network to Safeguard EB-5 Investors’ Funds

Samuel Silverman, Managing Partner of EB5 Affiliate Network, discusses the introduction of a new initiative that promises to protect EB-5 investors’ funds in the event of an I-526 application denial.

EB5 Affiliate Network (EB5AN), a leading EB-5 regional center and EB-5 service provider sponsoring more than 1,100 EB-5 investors from more than 40 countries around the world, has announced a new, unique initiative that provides for a guaranteed refund of attorney’s fees and USCIS filing fees in the event an EB-5 investor’s I-526 application is not approved. This guaranteed refund is for select current EB-5 investment projects sponsored by EB5AN.

The EB-5 visa process is costly, requiring investors to hire immigration counsel and pay their legal fees as well as to pay USCIS processing and filing fees—all in addition to a minimum $500,000 capital investment.

Certain EB-5 projects offer to refund investors in certain instances where their I-526 application is denied, but in these cases, any money spent on immigration attorneys or USCIS application fees are unrecoverable. To provide peace of mind to EB-5 investors and to indicate the strength of the projects that it sponsors, EB5AN will guarantee the refund of such attorney’s fees and filing fees for select current EB-5 investment projects.

EB5AN Managing Partner Sam Silverman said, “We are excited to implement this new safety feature for EB-5 investors, and we hope that this decision will set a new standard for the EB-5 industry with the goal of safeguarding investor capital and strengthening an alignment of incentives between EB-5 regional centers and individual EB-5 investors.”

About EB5 Affiliate Network, LLC: EB5AN is a leading provider of EB-5 project consulting and regional center affiliation services. The company has worked on more than 200 EB-5 transactions across the country and has completed applications for more than 75 new regional centers. Additionally, the company owns and operates 15 USCIS-approved regional centers across 27 states with an international team from a diverse set of institutional backgrounds in both law and finance, including business strategy, private equity, securities, and real estate.

 

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New EB-5 Regulations Announced – Investment Amount Increases


Advance Copy of EB-5 Final Rule

This final rule amends Department of Homeland Security (DHS) regulations governing the employment-based, fifth preference (EB-5) immigrant investor classification and associated regional centers to reflect statutory changes and modernize the EB-5 program. In general, under the EB-5 program, individuals are eligible to apply for lawful permanent residence in the United States if they make the necessary investment in a commercial enterprise in the United States and create or, in certain circumstances, preserve 10 full-time jobs for qualified United States workers. This rule provides priority date retention to certain EB-5 investors, increases the required minimum investment amounts, reforms targeted employment area designations, and clarifies USCIS procedures for the removal of conditions on permanent residence. DHS is issuing this rule to codify existing policies and change certain aspects of the EB-5 program in need of reform. DATES: This final rule is effective November 21, 2019.

Key Points from New EB-5 Regulations:
  • An increase in the minimum TEA investment threshold from $500K to $900K
  • An increase in the minimum non-TEA investment threshold from $1M to $1.8M
  • TEA’s will now be centrally designated by DHS
  • TEA’s will now only be available for projects that are located outside of MSA areas and unemployment calculations will only include “directly adjacent” census tracts to the census tract of the project – – Link here to list of MSA areas
  • Effective Date: November 21, 2019 – Any I-526 petitions filed before this date will be grandfathered under the current rules and lower investment amount of $500K for TEA projects

 

 

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Understanding the Implications of the USCIS Petition Processing Report for FY2019 Q2

United States Citizenship and Immigration Services (USCIS) has released the data on the number of EB-5 petitions processed in the second quarter of FY2019, which ran from January to March 2019. The updated statistics are available on the organization’s Immigration and Citizenship Data page.

The decline in the number of petitions the Immigrant Investor Program Office (IPO) processed during FY2019 Q1 has continued. After a 37% decrease in processing volume in Q1, this volume further decreased by around 60% in Q2, with the overall number of petitions processed falling to only 1,290.

In FY2019 Q2, the IPO processed 975 I-526 petitions, compared to 2,573 in FY2019 Q1 and 4,497 in FY2018 Q2. Additionally, significantly fewer I-526 petitions were submitted, with only 580 submitted during FY2019 Q2, down from 1,808 in FY2019 Q1.

The number of I-829 applications processed fell from 474 in Q1 to 285 in Q2, with the number of petitions submitted increasing slightly from 797 to 921. Processing data for I-924 applications has been withheld, but 22 applications were submitted, and 156 applications remain pending.

Of the 975 I-526 petitions processed, 180 petitions were denied and 795 were approved. Thus, the percentage of I-526 petitions approved decreased slightly, from around 85% in FY2019 Q1 to 81.5% in FY2019 Q2. Additionally, I-829 application approvals increased slightly from approximately 93.5% to 94.7%.

A total of 22,082 EB-5 petitions remain unprocessed: 13,105 I-526 applications, 8,821 I-829 applications, and 156 I-924 applications. While processing times for I-526 applications dropped slightly at the end of January 2019—to 20.4 months compared to 22.1 months in FY2018—as of July 2019, they have increased to 25.5 to 45 months. Similarly, processing times for I-829 petitions, which increased from 27.1 months to 30.9 months for the same period, have increased to 28 to 43.5 months.

The exact cause of the reduction in output is unclear, as USCIS has not offered any explanation for the slowdown. However, possible causes include shortages of staff or other resources at IPO, a decision to pause or reduce processing, and closer, more time-consuming scrutiny of petitions.

When processing volumes decrease, processing times increase. Consequently, it takes longer to clear backlogs, and new EB-5 program petitioners face longer processing times. Based on the current IPO output and backlog, any new petitions filed would take almost eight years to process. This will change if IPO output changes.

Although increased I-526 processing times are not ideal for those pursuing U.S. permanent resident status through the EB-5 program, it does have the benefit of providing some protection against children aging out due to delays, specifically for applicants facing visa retrogression and long wait times for visas to become available.

Essentially, if I-526 processing takes longer than the visa wait time, children should be protected against aging out. Under the Child Status Protection Act, a qualifying child’s age is frozen on I-526 submission, with the clock restarting on I-526 approval. Therefore, delayed I-526 approval potentially freezes the child’s age until a time closer to visas becoming available. If a delay occurs after I-526 approval and there is a significant waiting time for visas, the risk of aging out increases.

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Q2 FY2019 USCIS Statistics for EB-5 Petition Processing

The USCIS has updated its EB-5 petition processing statistics, displayed on the Immigration and Citizenship Data page, to reflect information about the petitions received and processed during the second quarter of the 2019 financial year (January–March 2019).

The overall number of EB-5 forms processed by the Immigrant Investor Office (IPO) during this period decreased significantly, from 3,116 in FY2019 Q1 to 1,290 in FY2019 Q2. This has been a particularly unproductive quarter for IPO.

The number of I-829 applications processed fell from 474 to 285, and I-526 applications decreased from 2,573 to 975. The data concerning the volume of I-924 applications processed has been omitted from the report, but based on the number of pending applications in the previous quarter (148), the number of applications received in Q2 (22), and the number of pending applications at the end of Q2 (156), it seems only 14 were processed.

Of the 975 I-526 petitions processed, 180 petitions were denied and 795 were approved. Thus, the percentage of I-526 petitions approved decreased slightly, from around 85% in FY2019 Q1 to 81.5% in FY2019 Q2. Additionally, I-829 application approvals increased slightly, from approximately 93.5% to 94.7%.

The number of I-829 applications received increased compared to the previous quarter, at 921 compared to 797 for I-829 applications, while the number of I-526 applications decreased from 1,808 in Q1 to 580 in Q2.

In relation to all types of employment-based petitions, those related to the EB-5 program constitute a small percentage. For example, in FY2019 Q2, USCIS received 388,338 applications for Employment Authorization Documents (EADs), compared to only 1,290 for all three categories related to the EB-5 program (I-526, I-829, and I-924). A total of 22,082 EB-5 petitions remain unprocessed, a number that consists of 13,105 I-526 applications, 8,821 I-829 applications, and 156 I-924 applications.

Processing times for I-526 applications have increased to 25.5–40 months, whereas processing times for I-829 petitions have increased to 28–43.5 months.

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EB-5 Immigrant Investor Program Modernization Rule Is Moving to the Final Stage

On June 27, 2019, the Office of Management and Budget (OMB) announced that EB-5 Immigrant Investor Program Modernization (RIN: 1615-AC07) has reached the final stage in the rulemaking process. Therefore, we expect the Final Rule to be published in the Federal Register within the next few days.

United States Citizenship and Immigration Services (USCIS) will announce the publication of the Final Rule on the USCIS Federal Register Announcements page. Interested parties can sign up on the page to receive email updates.

The Content of the Final Rule

Although the specific content of the Final Rule will not be publicly available until its publication, based on the proposed rule published in January 2017, we expect changes to EB-5 investment amounts and the regulations governing targeted employment areas (TEAs). For example, we expect minimum investment amounts to increase to $1.35 million or $1.8 million, depending on the location of the project. Nevertheless, because we do not know what changes OMB and USCIS have made to the rule since it was first proposed in January 2017, these amounts are an educated guess rather than a certainty.

The Effective Date of the Final Rule

The Final Rule will include a date on which the changes come into effect. This date will probably be 30 to 60 days after publication. It is important to note that the changes will affect only future I-526 filings. In other words, the new regulations on minimum investment amounts will not affect I-526 applications filed before the effective date set out in the Final Rule.

Additionally, after publication and before the effective date, Congress and the Government Accountability Office review the regulation. This may lead to delays in implementation. Similarly, implementation could be delayed if someone institutes legal action in federal court that necessitates judicial review. However, it is impossible to anticipate either type of delay.

The Implications of Changes to the EB-5 Program

The key implication of the looming changes is that those who want to take advantage of the lower EB-5 investment amounts need to do so now. It is important for investors to bear in mind that this news is likely to lead to a filing surge, so those who were born in countries that are currently experiencing backlogs and who are not part of the initial surge may find themselves facing even longer visa wait times. For example, during the grace period, several thousand investors are likely to submit EB-5 petitions, with half expected to be Indian nationals. For Indian nationals, this could add years to the current backlog.

To discuss your EB-5 investment options, including the advantages and disadvantages of beginning the investment process now, schedule a call with Sam Silverman, our managing partner, today.

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EB-5 Investment from Turkey

Despite social and political upheaval, Turkey’s economy has continued to grow rapidly over the last few years and is still seen as a strong force in the region. It now boasts the eighteenth highest GDP in the world, but rising debt makes this continued pace of growth uncertain. Turkey also faces increasing inflation that hit a 15-year high of 25.2% in October 2018. The Turkish lira is now trading at a rate of 5.5 lira per U.S. dollar, providing incentive for potential Turkish EB-5 investors to leave the country.

Wealth and Economy

In the last few years, Turkey has seen the highest emigration rate of wealthy citizens of any major economy, with a full 12% of its millionaires leaving the country in 2017. This mass departure can be attributed to high inflation, intensifying security and economic issues, and President Recep Tayyip Erdogan’s clampdown on his political opponents.

Political Landscape

Turkey was founded as a secular republic in the early 1900s and has made strides towards becoming a full democracy. However, President Erdogan has been accused of attempting to establish an autocracy, and he has gained notoriety for limiting dissent and free press. A failed coup in 2016 resulted in the arrest of thousands of soldiers and professionals seen as threatening to Erdogan’s government, and hundreds of journalists have been detained for criticizing his administration. Nevertheless, a 2017 referendum switched Turkey’s government to a presidential system, giving Erdogan significantly more power. In addition, Turkey’s attempts to join the EUhave been held back by its dubious human rights record, including the oppression of Kurds who make up a fifth of its population. In these circumstances, the fleeing of Turkey’s elite is quite understandable.

Crime and Safety

Turkey’s crime rate over the last two decades has increased significantly, even when taking into account its growth in population. Its number of prisoners almost quadrupled, with a 400% rise in robberies, homicides and drug-related offenses. Armed violence also increased by 61% from 2015 to 2017, leading affluent residents to search for more secure places to live and raise their families.

Environmental Conditions

Turkey’s rapid industrialization has led to unsafe levels of air pollution for at least 97% of Turkish city-dwellers, with the country quickly becoming one of the world’s largest producers of greenhouse gases. Coupled with water pollution and overfishing, Turkey’s abundant biodiversity is in jeopardy.However, the Turkish government has already begun plans to adopt more sustainable energy sources, including wind, solar, and hydropower.

Educational Quality

Primary school is free for all Turkish citizens, and 12 years of education are required for both boys and girls. However, as in Vietnam, Turkish education tends to emphasize memorization over critical thinking. Furthermore, curricula and educational materials are determined by the government’s education ministry11, and in 2017 the decision was made to remove evolution from all high school biology textbooks. Many critics accuse the Turkish government of trying to influence Turkey’s youth with religious ideology, which was compounded by the firing of 33,000 teachers after the failed coup in 2016. Therefore, many wealthy Turkish parents are looking elsewhere for more secular educational opportunities for their children.

EB-5 Project Selection Preferences

Turkish EB-5 investors are wary of their country’s high inflation rate and the current political crisis. With the clock ticking, wealthy Turks are most concerned with getting their money out of the country and into the U.S.as soon as possible. Asa result, EB-5 investors in Turkey tend to favor EB-5 projects that can move quickly, with returns on investments being a lower priority.

Capital Flow and Other Challenges with the EB-5 Process

Foreign exchange brokers can be found in most Turkish cities and can help facilitate money transfers into and out of the country. However, Turkish EB-5 investors should be prepared to answer questions about the source and destination of their funds, as the Turkish government is trying to crack down on financing to terrorist organizations. EB-5 investors in Turkey can transfer up to $50,000 before their bank has to notify the Turkish Central Bank of the exchange

Marketing Channels for Investors

The Turkish EB-5 market tends to be scattered, with only a handful of established immigration brokers. The majority of Turkish investors are connected through networks of small companies, such as chartered accountants, travel agencies, real estate brokers, and wealth managers. In addition, many Turkish EB-5 investors are sourced directly by regional centers and project sponsors through in-person seminars in Turkey. These groups also target Turkish investors who are already in the U.S. on alternative visas.

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EB-5 Investment from Iran

Iran is home to the world’s fourth-largest reserve of oil and second-largest reserve of natural gas, and it is within the top 10 world producers of both of these natural resources. As such, it has become the second largest economy in the MENA region behind Saudi Arabia. However, Iran has been the subject of increased international sanctions due to its interference in neighboring countries’ affairs, as well as skepticism over the promised discontinuation of its nuclear program.

Wealth and Economy

Sanctions lifted in Iran in early 2016 led to a dramatic increase of overseas Iranian spending on real estate in London and other European locations. Iran contains 1,300 individuals with at least $10 million in assets, and the number of millionaires after the initial removal of sanctions was expected to reach 55,000 by 2025. Some analysts at the time predicted a total of $8.5 billion would be spent on overseas property within 10 years of the sanctions being lifted. However, all of this predicted growth has been thrown into doubt now that the U.S. has reinstated international sanctions. Iran could now be headed for a recession, pushing wealthy Iranians to leave before it is too late.

Political Landscape

Iran is an Islamic theocracy headed by a president and a powerful supreme leader. Political instability in Iran has driven many residents to seek other countries in which to live, including America. However, tensions with the U.S. have intensified over the last two years, culminating in President Trump pulling the U.S. out of the landmark Iran nuclear deal in May 2018. Iran is also one of seven countries included in the current U.S. travel ban, rendering it highly improbable that Iranian EB-5 investors could earn an EB-5 visa even if their applications were approved.

Crime and Safety

Iran is considered very safe for foreign tourists, and its rate of violent crimes is quite low. However, Iran has one of the largest prison populations in the world and is a hotspot for narcotics and human trafficking. Hundreds of people are incarcerated for political reasons, and executions are common. As in Turkey, the Iranian government regulates freedom of expression and often penalizes journalists and activists for speaking out against the regime.

Environmental Conditions

Frequent dust storms, water contamination, and high air pollution are all plaguing Iran, leading to burgeoning health costs for its population. Tehran in particular faces some of the world’s highest air pollution due to a combination of outdated vehicles, power plants and factories, and the city’s higher altitude. Iran’s government took action by passing the Clean Air Law in 2017, which has slowly implemented changes to reduce pollution and prevent premature deaths.

Educational Quality

Primary education in Iran is required for all children, although the schools are separated by sex. The country has a very high literacy rate and schools are quite competitive, involving multiple entrance exams and heavy parental participation. English is a compulsory second language throughout high school, and women make up the majority of college students.Because Iran has a larger college-educated population than its economy can accommodate, it has a very high youth unemployment rate and one of the highest rates of brain drain in the world. This dilemmahas led to widespread social unrestamong young people inIran.

EB-5 Project Selection Preferences

The vast majority of Iranian EB-5 investors prefer to work through regional centers, although there are significant barriers that prevent most regional centers from accepting Iranian money. It is especially important for Iranian EB-5 investors to prove that their funds come from a legal source. EB5 Affiliate Network (EB5AN) works with Iranian EB-5 investors to assemble the proper I-526 documentation, and can provide regional center sponsorship under its 15 USCIS-approved regional centers.

Capital Flow and Other Challenges with the EB-5 Process

As described above, Iranian investors were eager to start moving their money out of Iran as soon as sanctions against the country were lifted in January 2016. However, matters have been complicated by the sanctions’ reinstatement, in addition to the U.S.’s already existing sanctions related to Iran’s human rights abuses and missile programs. Navigating this complicated field of regulations and their associated compliance costs has discouraged many U.S. banks from accepting Iranian money despite its legality.

Marketing Channels for Investors

Like in Saudi Arabia, the Iranian EB-5 market consists of a limited number of established and experienced agents. The majority ofIranian EB-5 investors are culled through networks of small companies that work with investors, includingreal estate brokers, travel agencies, andwealth managers. Iranian EB-5 investors are also targeted through seminars within Iran held by regional centers and project sponsors.Wealthy Iranians already living in America on other visas are targeted as well.

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EB-5 Investment from Saudi Arabia

Although the United States surpassed Saudi Arabia and Russia in 2018 to become the world’s largest producer of crude oil1, Saudi Arabia has amassed great wealth over the last half century with its own plentiful oil reserves. This has enabled it to maintain a large presence on the world stage, and it is home to an abundance of moneyed residents. Nonetheless, the recent crackdowns by the Saudi government against dissenters and perceived corruption have led to increased interest in Saudi EB-5 investing.

Wealth and Economy

As a result of its large oil reserves, Saudi Arabia is known for containing some of the world’s richest people, especially among the royal family and its associates. It currently is home to more millionaires than any other Middle Eastern country, totaling 176,000 in 20172. Saudi Crown Prince Mohammed bin Salman (MBS) has also launched an ambitious plan called Vision 2030 to diversify the Saudi economy, reduce its dependence on oil, and expand public service sectors throughout the country3.

Political Landscape

MBS has been seen by many as a reformer for the Saudi people, purging corruption within the government and royal family and ushering new changes into the kingdom. The most publicized reform has been the repeal of a long-held ban on female drivers. However, it is still common for Saudi activists to be detained and tortured for expressing dissent, and the Crown Prince has been heavily criticized for his country’s role in the humanitarian crisis in Yemen. MBS has also been embroiled in the scandal surrounding the 2018 murder of Washington Post columnist Jamal Kashoggi in the Saudi consulate in Turkey4. Political instability in Saudi Arabia has prompted many potential EB-5 investors to seek safer ground in a more liberal environment.

While Saudi Arabia welcomes expatriates into its workforce, their presence in the country must be tied to a sponsor and a specific work contract. The government offers no visas for retirees or opportunities for naturalization, making it quite difficult for non-Saudis to stay in the country after retirement5. This policy was enacted to prevent non-Saudi citizens from taking advantage of the country’s retirement and health benefits. As such, EB-5 visas might be an appealing option for wealthy non-Saudis after they retire.

Crime and Safety

Crime rates among the Saudi population are low, but this is likely due to the extreme punishments given to criminals or those who dare to speak out against the government. Penalties include lashings, torture, amputations, excessive prison sentences, and public beheadings6. Another issue of concern in Saudi Arabia is the ballistic missiles being launched across the border by Houthi rebels in Yemen since 2015. This is in response to Saudi Arabia’s continued military presence in Yemen. There is also an increased risk of terrorist attacks in the country, though the Saudi government has strengthened its security forces in response7. Still, many wealthy Saudis prefer to move their families to a more stable location.

Environmental Conditions

As the home of the largest desert on Earth8, Saudi Arabia’s frequent sandstorms compound the air pollution already emitted by factories and vehicles in its cities. The Saudi capital of Riyadh is now one of the most polluted cities in the world9, with current pollution levels shortening the average Saudi’s life by 1.5 years10. Agricultural practices and city expansion risk threatening the country’s rich biodiversity as well. Other large risks are oil spills, desertification, and shrinking underground reservoirs of water. The Saudi government is making some effort to transform the country into a more environmentally friendly economy, but sustainability is not yet a popular concept among the Saudi public8.

Educational Quality

Elementary through high school education is free for all Saudis, with a slightly lesser enrollment rate for girls than boys. Saudi Arabia is also creating more than 150 vocational training centers across the country so as to decrease its economic dependence on oil11. Thousands of Saudi students are sent to American universities as well, with the total reaching almost 60,000 in 2018. The vast majority of these students are sponsored by the Saudi government, with the intention that they will use their newfound knowledge to benefit the kingdom upon their return12.

EB-5 Project Selection Preferences

As in Vietnam, Saudi EB-5 investors prefer large, flashy projects boasting established brand names. EB5 Affiliate Network frequently works with Saudi project developers and sponsors to assemble the required project documentation for EB-5 Form I-526. EB5AN also provides sponsorship through its 15 USCIS-approved regional centers for projects seeking Saudi EB-5 investors.

Capital Flow and Other Challenges with the EB-5 Process

The Saudi government imposes no limits on how much money can be moved out of the country, assuming the money is earned legally. Saudi EB-5 investors and foreigners working in Saudi Arabia must ensure that the money they try to transfer matches their earnings on paper. Otherwise the government has the authority to open an investigation into the funds13.

Marketing Channels for Investors

Like in India, the Saudi EB-5 market consists of only a few experienced agents. Most Saudi EB-5 investors are sourced through small entities such as travel agencies, chartered accountants, wealth managers, and real estate brokers. In addition, regional centers and project sponsors target many Saudis directly through in-person seminars in Saudi Arabia itself. Saudis already in the U.S. on visas such as the H-1B or F-1 are also targeted.

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