USCIS` current guidelines on fiduciary accounts in the EB5 context are available in its policy manual (PM) at 6 USCIS-PM G.2 (A) (2) [PDF version]. As a general rule, in a trust agreement described in Scenarios 2 and 3, the fiduciary officer will repay, after rejecting the I-526 petition, the amount that remained in trust to the rejected EB-5 investor. If the amount of the trust is not sufficient to repay all of the EB-5 investor`s funds, the project documents will most likely guide the process of obtaining the remaining balance. Each EB-5 investor should be familiar with their project documents that guide the trust process. Once an I-526 petition has been adopted, approved or rejected, what happens with Denhand on a trust account depends on the EB-5 investor`s project documents. A difficult and quick rule is that, as soon as an I-526 petition is approved, all the money from the EB-5 investor remaining in trust must be released to the project company. If I-526 is rejected, the relevant provisions of the project documents will determine whether funds are repaid to the EB-5 investor and how this is done. Regional centres have introduced increasingly complex trust models in response to changing EB-5 conditions, i.e. longer wait times for approval of I-526 petitions. However, these agreements pose greater risks for investors, who must ensure that they re-forward trust terms with the help of qualified financial and legal experts. The evolution of the structure of fiduciary agreements reflects two opposing views: while investors prefer to maintain a conservative agreement on the release of funds to protect themselves from the possibility of rejecting petitions, project proponents are trying to access private equity and move projects forward as quickly as possible under more aggressive release conditions.
Regional centres have more aggressive fiduciary arrangements to satisfy them, creating a new fiduciary landscape for investors. This article discusses current trends in this area and outlines strategies that regional centres can implement when negotiating fiduciary agreements to address the concerns of all parties. The abandonment of fiduciary contracts that depend on the approval of I-526 petitions is an attempt by regional centres to adapt to the changing demands of the EB-5 market. More complex mechanisms for unlocking funds allow projects to move forward on time, reducing the possibility of creating contingencies that would otherwise affect the viability of the project and, therefore, the approval of investors` I-526 petitions. This possibility is illustrated by the typical scenario of a regional centre that has raised all the capital necessary to build and operate a hotel, but must wait for the decision of the investors` petitions before moving forward with the project. The use of a subscription receiver account to accept capital contributions from EB-5 investors seeking permanent residence in the United States through EB-5`s immigration investment program has been widely accepted by industry players. Although a properly structured trust agreement is not imposed by immigration legislation or regulations, it is an integral part of the overall success of an EB-5 project.