Economic trends and changes to immigration laws mean the EB-5 landscape will look different based upon where an applicant is from.

2022 was an eventful year for the EB-5 Immigrant Investor program. The EB-5 Reform and Integrity Act of 2022 renewed the Regional Center program for five more years and brought with it a lot of changes that will affect both investors and issuers. For investors, rules such as concurrent filing for Adjustment of Status (AOS) with I-526 applications and reserved visas for rural, TEA, and infrastructure projects may greatly affect investing strategies.

Depending on an investors’ home country, there are distinct advantages to certain types of EB-5 investments that could lead to shifting industry trends in the next year. Here’s what to know about current trends in EB-5 and how they vary based upon an investor’s nationality.

Russia: Is a wave of Russian EB-5 capital coming?

As noted in a recent article from the IIUSA Regional Center Business Journal, Russia has become increasingly significant in the world of EB-5, producing 200 investors in 2019 alone. The big question surrounding the country right now is whether the political situation in Russia and its neighboring countries will cause a decline or increase in immigration to the US, specifically through immigration by investment.

According to the IIUSA article written by Natalia Polukhtin and Natalia Pronina, “Despite a gloomy prognosis fueled by geopolitical and economic turmoil in the region historically comprised of Russian-speaking investors, the demand for EB-5 from Russia, Ukraine, and Kazakhstan not only still exists, but is now stronger than ever.”

Due to uncertainty surrounding Russia’s war with Ukraine, it’s been reported that more than 300,000 people relocated from Russia in March 2022 alone to ensure uninterrupted operation of commercial and professional activities. According to Polukhtin and Pronina, “more than 15,000 millionaires are expected to leave Russia before the end of 2022.” Ukraine is also poised to lose as much as 42% of its millionaire population by the end of the year.

Based on those numbers, one might think Russian EB-5 activity is about to increase. However, there are additional hurdles for Russian investors that may make them think twice about EB-5. To start, Russia and the US do not have a bilateral treaty that allows foreign investors the right to conduct business in the US on a temporary basis. Therefore, many Russian investors first relocate to a friendlier jurisdiction before pursuing their goal of permanent immigration to the US. Though 40% of Russian billionaires have more than one passport, potentially eliminating this hurdle, the difficulties don’t end there.

As Polukhtin and Pronina note, “Russian originated capital is one of the most difficult to document for EB-5 petitioners.” This is due to a cloudy tax system, corruption in the government and banking sector, and limits on the amount of currency that can be transferred out of the country, not to mention the documentation required to prove the capital was legally obtained and remitted to the NCE in accordance with all regulations.

While Russian EB-5 activity may increase due to a desire among Russian nationals to relocate, there are a lot of things that make EB-5 difficult for them, meaning a major immediate surge in Russian investment is unlikely, with a more modest increase being a realistic expectation.

Russia is not the only country that may or may not see a big increase in applications in the coming years. Two of the most popular EB-5 countries may be poised to increase activity as well.

China and India: rReserved VISAs and the EAGLE Act

One of the most intriguing features of the RIA is the provision for reserved visas: 20% of visas in each fiscal year will be reserved for those investing in rural areas, with 10% for high-unemployment areas and 2% for infrastructure projects. This is combined with a provision that allows for investors to apply for Adjustment of Status concurrently with their I-526 applications.

While concurrent filing is available to most new investors, it doesn’t apply to those from countries that are not current, which includes China and India. Therefore, if Chinese or Indian investors put their EB-5 capital toward rural investments, infrastructure projects, or those in a TEA, they could potentially “skip the line” and apply for AOS concurrently without undergoing a lengthy wait period.

Given this change, it’s anticipated that there will be an increase in demand for rural investments, particularly for investors from China and India. It may also mean an increase in rural investments by investors from Vietnam. According to a recent webinar from Green Card by Investment, the current processing time for Vietnam is up to 7 years. As of December 2022, concurrent filing for Vietnamese nationals is allowed, but that may soon change.

Another element to watch out for is the potential passage of the EAGLE Act, which would eliminate country caps on employment-based green cards. If this law were to pass, immigrants from China and India may have a better chance of obtaining these green cards, and therefore might have less of a need for EB-5. It’s unclear if the law has a chance of passing or if this is indeed the effect it would have, but it’s something to watch out for. India currently has its own issues regarding H-1B visas and the tech industry that also may affect the EB-5 industry.

India: H-1B VISAs, tech layoffs, and EB-5

Widespread layoffs in the tech industry are having a major effect on immigrants with H-1B visas. It’s expected that immigrants working in Silicon Valley on H-1B visas who’ve recently been laid off, particularly those from India, may look to EB-5 as a way to stay in the country. Thanks to the RIA, this is easier than it used to be.

When an H-1B visa holder is laid off, they have a 60-day grace period that begins upon termination (unless the visa holder has fewer than 60 days remaining on their visa) in which they can file for Adjustment of Status. There are options such as switching to an F-1 student visa or CR1/IR1 spouse visa, but thanks to the RIA, it’s also possible to use EB-5 to stay in the country.

Because of the Reform and Integrity Act’s provision regarding concurrent filing, H-1B visa holders can file for AOS and I-526 concurrently instead of having to wait until I-526 approval (which in the past may have taken much longer than 60 days). While applying for AOS, they can also file an I-765 application for a work permit.

This means that if an H-1B visa holder is laid off, they can file I-526, I-765, and AOS applications at the same time, and when issued their employment authorization (typically within 3-4 months) can begin seeking new employment. The applicant’s entire family could also potentially stay in the US with work and travel benefits during the EB-5 process.

In addition to the potential spike in EB-5 investment from India and other countries with a large number of H-1B holders, the discussion at the Green Card by Investment webinar also focused on a potential subset of those investments: those involving partial payment plans.

While it is typical in EB-5 to put the entire investment amount into escrow before an I-526 application is filed, this isn’t required. It’s possible to put only a portion of the investment amount into escrow upon filing, so long as the entire amount is funded before I-526 adjudication. While the I-526 application is pending, the applicant can supply further evidence of payments as proof that the investment was fully funded.

This is good news for those who may need to sell securities in order to fund their investments. By waiting a few extra months, those securities could be worth more thanks to a potential rebound in the stock market. Indian investors are also limited by currency remittance laws that only allow $250,000 per year to be transferred. For those cases, slower-moving categories like TEAs may be preferable to rural investments, which have the fastest processing times.

While all these predictions are based on the analysis of industry experts, it’s unclear as of now what will happen with EB-5 in 2023. Changes in the number of active Regional Centers, the types of projects being offered, and the speed of USCIS processing may greatly affect investor behavior.

Regional Centers need to work with partners who understand the intricacies of EB-5 and where the market is headed. At JTC, we’re up to date on the latest EB-5 news to make sure our clients have the best information possible at their fingertips. Since every EB-5 project is different and every EB-5 investor is different, we offer a range of services that can be tailored to the specific needs of our clients, from escrow and fund administration to immigration workflow and fund accounting.

For investors, JTC’s award-winning online investor portal allows 24/7 access to key documents from anywhere in the world, on any device, so no matter an investor’s individual situation, they can get the information they need for their applications.

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