Meeting minimum RIA requirements may not be enough to attract investors, protect your reputation, and succeed long-term in EB-5.
Among the provisions of the EB-5 Reform and Integrity Act of 2022 (RIA) was a third-party fund administration requirement designed to combat fraud and abuse in the program. As Regional Centers have been embracing the benefits of fund administration as opposed to annual audits, there has been an increased demand for third-party administrators with experience specifically in EB-5, but not all EB-5 administration solutions are created equal.
Some issuers may be tempted to go with a fund administrator that merely meets the minimum requirements, resulting in many tasks being self-administered. Others have engaged off-the-shelf Private Equity fund administration solutions that are not designed for EB-5, resulting in insufficient reports or unexpected delays in processing.
What both these options lack is expertise in the specific challenges that EB-5 can present and how to manage them. What’s more, they don’t account for requirements that don’t fall under the banner of fund administration, which can lead to disastrous results if mistakes aren’t caught and investors are forced to pay the price.
As the leading name in EB-5 administration for more than a decade, JTC not only offers EB-5 fund administration, but a customizable suite of services that allow Regional Centers to get EB-5-specific help in a range of areas according to their unique needs. In addition, we offer services for investors as they transition to life in the United States, helping them feel more at ease with the EB-5 process. Here are some of the additional functions your Regional Center may require, and why basic fund administration might not be enough.
Escrow
Accepting EB-5 capital requires an understanding of the nuances of international exportation of funds. Many investors come from countries with remittance limits, requiring multiple transactions to be initiated by different individuals, or large transfers to come from students, and many large banks don’t understand EB-5 well enough to accommodate these issues. This can lead to funds being delayed or returned, or the accounts being closed altogether.
Additionally, challenges can arise if a Regional Center uses the depository bank as its escrow agent. If the bank has a policy that would prevent it from accepting deposits from certain countries, or is unable to accept wires from individuals on behalf of the ultimate EB-5 petitioner, funds may need to be moved quickly to accommodate the needs of the project. If the bank is the escrow agent, this may not be possible.
As both an independent escrow agent and escrow administrator, JTC works with a vast network of top banks to allow our EB-5 clients to hold investor funds in separate, FDIC-insured accounts while also retaining the ability to move funds quickly should the need arise .
By employing EB-5 escrow from an independent agent like JTC, Regional Centers can protect investor funds, strengthen banking relationships, and have the flexibility to move capital as needed, improving project marketability, security, and financial returns.
Banking/Treasury
JTC’s banking capabilities extend beyond subscription funds. Because JTC is a global company, we work with both fund and private clients who operate around the globe. Whether you’re fundraising in the EU or looking to deploy capital in other jurisdictions, our global Treasury Services offers a transparent, proactively-managed range of cash management, foreign exchange, and lending services supported by the expertise of our dedicated team of experienced market professionals. JTC’s Banking & Treasury team could be a resource for EB-5 clients’ global banking and treasury needs as well as the needs of EB-5 investors.
Cosignatory
The RIA requires the third-party administrator act as cosignatory on all disbursements of investor subscription funds to ensure the movement of funds is in accordance with offering documents. If your fund administrator isn’t familiar with the nuances of an EB-5 offering memorandum or loan agreement, they could cause slowdowns in the processing of transfers, or worse, fail to ensure investor funds are released at the proper time to a proper recipient, which could result in the ultimate denial of the investor’s green card. With JTC, you have a trusted name that knows your project intimately, so we can fully integrate with your processes while providing extra protection for investors.
Beyond RIA requirements, investors want to be sure their funds are being managed properly. That’s why JTC has strict rules regarding drawdown accounts, based on an understanding of the expected triggers to transfer funds and what documentation will satisfy those triggers. Our solution tracks the flow of funds and produces a number of reports for Regional Centers, regulators, and investors, with document aggregation and a full audit trail. We employ fast setup and seamless AML, KYC, and OFAC compliance so projects are not delayed while offering greater monitoring for investors’ funds.
Fund Accounting
EB-5 projects incorporate elements of large-scale real estate and Private Equity funds along with the added complexity of EB-5 capital sources. This requires complex accounting solutions that incorporate institutional-grade technology used by PE managers to increase efficiency as well as specific expertise in EB-5.
JTC’s purpose-built technology-enabled fund accounting solution for EB-5 addresses the complexities of EB-5 projects at scale, while also delivering the due diligence and operational performance being adopted as a best practice by the Private Equity market. We can offer the types of solutions you need at any stage of growth so you won’t be limited as you find new opportunities.
Investor Services
EB-5 investors relocating their families to a new country as they pursue their green cards face a lot of challenges beyond their initial investments. The more their Regional Center can provide the services they need, the easier their transition to life in America will be, and the more comfortable they will feel making an investment.
As a global company, JTC works in jurisdictions around the world and has capabilities through our Private Client Services division that go beyond what any other EB-5 fund administrator can offer. We work with individuals’ financial advisors and legal representatives to find specific tailor-made solutions to their unique situations, including trust services and wealth management to help them better understand their move to America and the opportunities available to them.
Why JTC
JTC is not new to EB-5: we’ve been a trusted name since long before the RIA. Our core best practices have not only become standard in the industry, but many are now mandated by legislation.
By offering a wide range of EB-5 services all under one roof, we are able to customize our offerings for each client in order to complement their internal capabilities with the independent third-party oversight intended by the RIA. With a client services team that has years of experience specifically in EB-5, we provide transparency and peace of mind for investors, regardless of the type of project or what individual needs investors may have.
To learn more about JTC’s EB-5 services,
