Navigating EB-5 RIA Compliance: Fund Administrator or an Annual Audit for your EB-5 Fund Raise?

The EB-5 Reform and Integrity Act of 2022 (RIA) brought a host of new requirements for raising capital through the EB-5 program. Among the most important: new commercial enterprises (NCEs or EB-5 Funds) and/or the regional centers that sponsor them must now choose one of two compliance paths:

• Hire a Fund Administrator, or
• Engage an Accountant to conduct an annual audit.

This article breaks down the pros and cons of each approach to help you make the right call for your project, your investors and/or for your regional center.

1. Preventing Problems vs. Fixing Them Later

The Fund Administrator: A Preventive Approach

Opting for a Fund Administrator means putting proactive checks in place. Their job is to review and approve the movement of funds at two key points: when money enters the NCE and when it's disbursed into the project.

For inbound funds, many EB-5 funds use escrow agents to receive money from foreign investors—even though it’s not required by law, it's widely recommended. Under Section Q of the RIA, if escrow is used, the Fund Administrator must be a signatory to the escrow agreement and co-sign on all releases of investor funds into the NCE.

A good Fund Administrator can flag issues early and advise escrow officers—who may not be well-versed in immigration law—before any money moves.

On the outbound side, when funds flow from the NCE into the project, the Fund Administrator is again required to co-sign on transfers. Before doing so, they’ll verify that (a) every draw request is satisfactorily supported by proper documentation (i.e. documentation which would normally be required in commercial construction lending arrangements), and (b) every disbursement complies with the EB-5 Fund’s offering documents, which have been reviewed and approved by USCIS as part of the project’s I-956F application.  Such offering documents include the project’s private placement memorandum, business plan, economic analysis, and operating agreement.

This ongoing oversight significantly reduces the risk of problems during the investor’s I-829 process, when they apply to remove conditions from their green card. Errant transfers or expenditures, or the accidental and statutorily impermissible commingling of EB5 funds with other funds are preventable with a competent Fund Administrator. 

Because disbursement routines rarely change, the approval process becomes smooth and predictable. And when unexpected changes do occur—like project budget updates or shifts in funding sources—a competent Fund Administrator helps you adapt without falling out of compliance.

The Annual Audit: A Reactive Approach

The other route is hiring an accountant to conduct an annual audit. This involves reviewing a year’s worth of financial activity to confirm that funds were used as intended.

The downside? Mistakes might go unnoticed for months. Fixing them after the fact can be costly—or, in some cases, impossible, jeopardizing the approvability of investor petitions and exposing the NCE and its principals to lawsuits by investors.

Even worse, traditional auditors often lack expertise in EB-5 program specifics. Most focus on GAAP (Generally Accepted Accounting Principles), not immigration compliance. That means they may not catch issues like whether a particular expense qualifies as job-creating under EB-5 rules, or whether a construction consultant’s certification is required in connection with an expenditure, because the NCE and JCE entities are affiliated.

Even experienced EB-5 audit firms can't change the fact that they’re looking backward, not forward. Delays in identifying issues can lead to major setbacks and legal exposure. 

Lastly, the purpose of subsection Q is to improve the integrity of the EB-5 Program by preventing fraud and/or misappropriation of EB5 capital. Unfortunately, audits do not necessarily catch or prevent fraud or misappropriation of funds. Most auditors only review batches of financial documents provided by their clients, which leaves gaps in the financial story of a particular project. Clients of CPAs may also provide false documentation which may easily slip by an auditor. A competent fund administrator can perform a real time review of documents alongside the project budget to readily spot inconsistencies or concerns with business and financial documents used to support drawdowns of EB5 capital.

2. Regional Center Compliance Made Easier with a Fund Administrator

Fund Administrators don’t just approve disbursements—they also track and store detailed documentation that shows exactly how funds were spent. This includes capturing project expenditure documentation such as third-party invoices for goods and services, professional and construction service contracts, lien waivers and loan documentation, and other records that are critical for demonstrating job creation.

This makes it significantly easier to meet annual reporting obligations. Each year, regional centers must file Form I-956G with USCIS, which includes:

1. Total EB-5 capital invested
2. Evidence that capital has been committed to the project
3. Documentation of project progress
4. Proof of job creation

Additionally, regional centers and NCEs must compile all historical expense documentation on behalf of their projects to prepare and disseminate an I-829 filing template to all investors, which is a capstone filing that documents all of the job creation, project expenditures, and project revenue generated throughout the lifecycle of the  project. It is common to amass a decade’s worth of documentation to prepare an I-829 filing template. With PRXY, clients have all of their documentation in one neat and easy location. 

A competent EB-5 Fund Administrator will collect and retain this information, making the regional center’s I-956G filing easier to compile.

Additionally, some fund administration tools, like PRXY, include automated job calculation tied to the project’s economic analysis that can later be verified by the project’s economist. 

3. How Fund Administrators Help with Investor I-829 Filings

Investors must file Form I-829 to remove conditions from their green card, proving their investment created at least 10 jobs. A competent Fund Administrator’s Job Creation Report simplifies this process with documentation that shows:

• The investor’s funds reached the project
• The money was used appropriately
• The jobs were actually created

This evidence helps investors build a strong I-829 submission, reducing the risk of delays or denials.

4. Preparing for the USCIS 5-Year Regional Center Audit

The RIA also requires every regional center to undergo a comprehensive USCIS audit at least once every five years. These audits are more rigorous than project annual audits and come with a tight turnaround—typically just two weeks to respond.

USCIS may request:

• Investor subscription agreements
• Wire transfer records tracing funds from escrow through the NCE to the project
• 24 months of bank statements for both the NCE and the affiliated JCE
• Systems used to track investor performance and project data

An annual audit might help with some of this, but it often falls short—especially when it comes to job creation documentation, investor document management, and transactional record keeping. Auditors typically don’t produce the level of documentation or detail required by USCIS, leaving fund managers scrambling to collect everything USCIS asks for.

By contrast, Fund Administrators can provide much of this information quickly, reducing the stress and workload of an audit.

5. Could Fund Administrators Offer a Marketing Edge?

There’s growing anecdotal evidence that using a Fund Administrator can also help with investor relations. Some offshore placement agents and investors are starting to ask whether a fund administrator is involved in a project they are considering—and some agents have even requested a list of projects utilizing a Fund Administrator.

While this marketing benefit isn’t guaranteed (and shouldn’t be the sole reason for your decision), it’s something to consider as the EB-5 landscape becomes more competitive.

6. Key Questions to Ask When Choosing a Fund Administrator

Not all Fund Administrators are alike. If you decide to go this route, be sure to evaluate candidates based on:

• Experience: Do the principals have backgrounds in immigration, real estate lending and best practices, or corporate law? Do they understand the nuances of the RIA?
• Comprehensiveness: Can they support I-956G filings, five-year audits, and investor I-829s?
• Ease of Use: Is their platform compliant and user-friendly?
• Responsiveness: Will they minimize operational headaches with fast onboarding, quick approvals, and seamless banking integrations?

7. Proactive vs. Reactive Compliance

Both Fund Administrators and Auditors meet the RIA’s compliance requirements—but they take very different approaches.

• Fund Administrators offer real-time oversight and prevent problems before they start.
• Auditors review past transactions and flag issues after the fact.

Given that the cost of each option is often comparable (unless USCIS requires a full audit of the JCE, which can get pricey), EB-5 fund principals are wise to weigh the long-term benefits of proactive compliance.

By thinking strategically about how compliance fits into your broader investment and operational goals, you can set your EB-5 project up for smoother execution, fewer surprises—and better outcomes for all involved.

Related  FAQs

Fund Administration FAQs

Q: What does an EB-5 Fund Administrator do?
A: They proactively review and approve fund movements, ensure compliance with EB-5 rules, and assist with USCIS filings.

Q: Do I need an audit for my EB-5 fund?
A: Not necessarily. You can choose between an annual audit or using a Fund Administrator to fulfill RIA compliance.

Q: What is the I-956G filing requirement?
A: It’s an annual filing that regional centers must submit to report project progress, capital deployment, and job creation.

Q: How do I prove job creation for an I-829 filing?
A: The designated Fund Administrator tracks all EB-5 expenditures and stores that data. That data serves as a basis in which the economist can determine total job creation at the 829 stage. Some Fund Administrators also track all project-related spending for a more accurate 'real-time' report on job creation. In all scenarios, USCIS wants to see documentation such as tax returns, financial statements, bank statements, K-1s, and expenditure reports from the NCE and JCE as actual evidence that the EB5 funds were deployed for purposes of creating jobs.

Want to see what better EB-5 Fund Administration looks like?