While the EB-5 Regional Center Program has helped generate more than $20 billion in foreign direct investment between 2008 and 2015 at no cost to taxpayers, according to non-profit trade association IIUSA, it has been plagued by uncertainty due to the lack of long-term authorization. In recent years, investors have had to worry about looming sunset dates and a series of short-term reauthorizations, the most recent being in December 2020, which extended the program until June 30, 2021.
To eliminate this uncertainty and solidify the government’s commitment to the program, Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT) have introduced the EB-5 Reform and Integrity Act of 2021, which aims to “promote and reform foreign capital investment and job creation in American communities.” The bill will reauthorize the program for five years, through 2026, and provide crucial transparency and integrity measures.
According to Senator Grassley’s office, the bill requires project sponsors to “utilize a fund administrator or commission an independent annual audit to prevent the misuse of investor funds.” Requiring regional centers and/or promotors to work with qualified administrators focused on security and compliance will introduce a level of security for investors. The bill also mandates that these new protections will apply to current EB-5 investors, not just new petitioners.
These enhanced security measures are welcome news to JTC Americas, Formerly NES Financial, which has advocated for third-party oversight in EB-5 projects since 2010. Requiring such integrity measures is a validation of the company’s principles and its commitment to transparency, and it will ultimately ensure the program will continue to encourage development, protect investors, and support underserved communities.
“JTC Americas has a solution that is compliant with the new requirements,” announced Reid Thomas, Chief Revenue Officer and Managing Director at JTC Americas. “Our EB-5 Administration Solution Suites provide an integrated approach to administering the entire EB-5 program life cycle, including audit trails for issuers, investors, and regulators.”
“The future for EB-5 is actually bright,” added Reid. “the integrity measures will help address many outstanding concerns. Issuers needing to implement the services of a third party fund administrator mid offering will need to start the process sooner rather than later to comply with the new integrity measures in time .”
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