Fund Administration and the Annual Audit: Choosing an EB-5 Compliance Path

The fund administrator: review before each transfer

A fund administrator reviews and approves funds at two points.

1. When investor money passes through escrow into the NCE, the administrator signs the escrow agreement and co-signs each release.

2. When money leaves the NCE for the project, the administrator co-signs each transfer after confirming two things: the draw carries the documentation a commercial construction lender would expect, and the disbursement matches the offering documents USCIS reviewed with the project’s I-956F.*

This process of proactive review catches potential errors before transfers go through. Examples include an expense outside the approved use of funds, a missing consultant certification, or bridge repayment is not in compliance with USCIS policy. Draw routines change little from month to month, so approvals settle into a predictable schedule. At PRXY, approvals usually happen the same day if the request is made in the morning and there are no issues with the transfer. When a budget or funding source changes, the administrator helps the project adjust and stay in compliance.

The annual audit: review after year-end

An annual audit examines a year of financial activity after it closes. An error made in February may surface the following spring, when correcting it costs more or, in some cases, is no longer possible. An uncorrected error can put investor petitions at risk and expose the NCE, the regional center and their principals to investor claims.

Auditors face two further limits. Most work to GAAP, the general accounting standard, which does not address whether an expense counts toward EB-5 job creation or is compliant with offering documents. And auditors review the documents a client chooses to provide, which can leave gaps in the record of how capital was spent.

Three filings that depend on the record

The compliance path also shapes how a project prepares three later filings.

1. Form I-956G

   Each year, a regional center reports capital invested, capital committed, project progress and job creation. Because Fund Administrators gather records at each draw, the filing uses documents already on hand.

2. Form I-829

   To remove conditions on their green cards, investors must show their capital reached the project, was used as approved and created at least 10 jobs. An expenditure record kept by your fund administrator from the first draw supports each petition and lowers the risk of a request for evidence. USCIS expects that record to include tax returns, financial statements, bank statements, K-1s and expenditure reports from both the NCE and the job-creating entity. For many projects, that record covers close to ten years.

3. The USCIS regional center audit

   At least once every five years, USCIS may request subscription agreements, wire records tracing funds from escrow through the NCE to the project, and 24 months of bank statements, with about two weeks to respond. An annual audit leaves the fund to assemble most of this material on its own.

Choosing a path

In many cases the two options cost about the same, unless USCIS requires a full audit of the job-creating entity.

Investors are noticing how funds handle compliance. Some offshore placement agents now ask whether a project uses a fund administrator, and some have requested lists of projects that do. For a fund raising capital overseas, an administrator’s record shows investors how each dollar was handled.

Funds that choose an administrator should evaluate providers on four points:

• The principals’ experience in immigration, lending and corporate law
• Support for I-956G, I-829 and five-year audit
• A platform that is easy to use
• Response times for onboarding, approvals and banking