USCIS Announces Launch of EB-5 Regional Center Compliance Audit Program
On March 20, 2017, USCIS announced the launch of the EB-5 Regional Center Compliance Audit Program. According to the USCIS website, “compliance audits are an additional way to enhance EB-5 program integrity and verify information in regional center applications and annual certifications.”
The regional center applications and annual certifications currently consist of the Form I-924 and the Form I-924A. Both are filings made solely by regional centers regardless of whether or not the regional center controls the sponsored EB-5 project in any way. The Form I-924 is filed for initial regional center designation applications as well as amendments. Amendments include regional center structural amendments to change geography, industries of focus, or organization, as well as exemplar amendments for specific project preapproval. The Form I-924A is the annual required filing for all regional centers at the end of the fiscal year to maintain designation.
Absent specific statutory authority that may be conferred by new legislation, USCIS appears to be taking matters into its own hands to verify the bona fides of regional centers. The public description of the Compliance Audit Program outlines an open-ended inquiry process that would “verif[y] compliance with applicable laws and authorities to ensure continued eligibility for the regional center designation.” The USCIS audit team will:
Review applications, certifications, associated records;
Review public records and information on the regional center;
Verify the information, including supporting documents, submitted with the application(s) and in the annual certification(s);
Conduct site inspections;
Review and analyze documents; and
Interview personnel to confirm the information provided with the application(s) and annual certification(s).
The categories of auditing activities can be grouped under: (1) verification of information in regional center applications and annual certifications, including updates, (2) verification of continued eligibility, based both on regional center submissions and outside records, and (3) consensually obtained information through “data requests” and site inspection.
In essence, the announcement indicates that compliance audits may consist of the predictable and the unpredictable. The predictable parts will be keyed to a review and interview relating to I-924s and I-924As already submitted by regional centers. The unpredictable parts can be predicated on outside information from “government systems” and other extrinsic information. The problem here would be lack of transparency, as regional centers may have no advance access to those extrinsic records to verify accuracy or relevance.
USCIS auditors may also request other unspecified information, on a consensual basis, beyond the bounds of any prior submission and even beyond broadly verifying continued eligibility for regional center designation. It remains to be seen what kind of consensual information may be requested. It may include consensual biographic, background, and/or biometric data for regional center principals. These are among oversight measures contemplated in proposed EB-5 reform legislation but not currently authorized by statute or regulations.
The update obligation is also disconcertingly nebulous. The USCIS website indicates that to prepare for the audit, the regional center should have “any updates” (emphasis added) to the information originally submitted with any application or certification. But questions remain as to the scope of the updates, frequency, and materiality. For example, if construction schedule is delayed by 3 months but completion is still forecast to occur within the required job creation windows, should regional centers be concerned about such an update? Would USCIS auditors be trained sufficiently to evaluate such updates for nonmateriality?
Of parting concern is the audit report. The audit team will prepare an audit report after the compliance audit, to be made part of the regional center record. Will regional centers have the opportunity to review the audit report before it becomes a permanent part of the regional center dossier? Will personnel turnover, evolving policy, improved audit team training down the road result in prejudice to the regional center based on either lack of initial training or inaccessibility to the regional center to correct the record?
In the meantime, here are the key takeaways for regional centers:
Be prepared for a compliance audit. Maintain complete records of all filings, supporting evidence, and updates keyed to the USCIS record. USCIS will expect regional centers to “immediately provide any readily available documents and information”. Records should be maintained for ready production on short or no notice. While it is the author’s understanding that USCIS may give some notice, there is no mention of notice in the public announcement.
Be aware that USCIS may also research information. USCIS will research and reference information that it deems relevant to assessing regional center designation maintenance. This may include public and nonpublic information about the project, involved individuals, and regional center personnel.
Produce requested documents after site inspections. USCIS will expect “all additional information requested” and updates in any follow-up correspondence from USCIS.
Be aware that an audit report will be a part of the regional center record. The auditor training, content of audit reports, and their ultimate use are yet undetermined.
Prepare personnel for interviews. The announcement does not limit interviewing to regional center principals. Accordingly, all regional center staff should be prepared to answer basic question about regional center operations and principals. They should also know to whom they should direct USCIS auditors for organizational or project-related questions they cannot answer.
Although participation in audits is voluntary for now, it is manifest that in most instances a regional center is best served by participating and putting its best foot forward. The open-ended standards, however, together with lack of transparency on extrinsic evidence and audit reports, should be concerning.
- New York
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