Compliance and Best Practices in EB-5 – Part 1
The EB-5 Program is often introduced as a pathway to U.S. permanent residency. But before it’s an immigration benefit, it’s something else entirely: an investment in a private security.
That distinction — often overlooked — is what underpins the compliance framework surrounding EB-5 and why the involvement of regulated, FINRA-registered broker-dealers is increasingly central to the program’s integrity and investor protection.
In Part 1 of CanAm’s Compliance and Best Practices in EB-5 series, we examine why EB-5 offerings are treated as securities, what that means for investors, and how the broker-dealer model adds structure, accountability, and trust to an evolving global investment landscape.
EB-5: More Than a Pathway to a Green Card
Every EB-5 investment is subject to U.S. securities law because it involves the offering of an interest in a partnership or company in exchange for a potential return — both financial and immigration-based.
As Pete Calabrese, CEO of CanAm Investor Services, explained during CanAm’s recent compliance webinar, “An EB-5 investment isn’t just a visa application. It’s an at-risk investment under U.S. securities law — and that means compliance and due diligence aren’t optional.”
That’s what differentiates EB-5 from “donation-based” or non-commercial immigration options: investors are purchasing a security, not making a gift. Their capital is required to remain at risk in a job-creating enterprise for the duration of their immigration process.
Understanding that reality helps investors evaluate their options through a dual lens: immigration outcome and financial risk.
Why Broker-Dealers Matter in EB-5
A broker-dealer is a regulated intermediary that helps structure, distribute, and monitor securities offerings in compliance with U.S. law.
In EB-5, the broker-dealer plays a vital role in ensuring that:
- Offerings are properly structured and disclosed under SEC Regulation D and Regulation S.
- Marketing and distribution activities comply with both U.S. and foreign solicitation rules.
- Investors receive accurate, balanced information about both risks and potential benefits.
- Transactions are handled with full transparency, including the suitability of each investor’s financial and immigration goals.
For CanAm, that role is carried out by CanAm Investor Services, a FINRA-registered broker-dealer that works in close coordination with its affiliate, CanAm Enterprises, to bring institutional rigor to every EB-5 offering.
As Calabrese noted, “The broker-dealer framework is what brings the kind of oversight investors expect in any regulated investment — and that’s a good thing for everyone involved.”
Captive vs. Independent Broker-Dealers
Broker-dealers in EB-5 generally fall into two categories:
- Captive Broker-Dealers, which are affiliated with a specific regional center or sponsor (like CanAm Investor Services).
- Independent Broker-Dealers, which distribute offerings from multiple sponsors or regional centers.
Each model offers distinct benefits:
- Captive broker-dealers often have deeper knowledge of the sponsor’s due diligence, structure, and track record.
- Independent broker-dealers can provide broader market comparisons across multiple projects.
Regardless of structure, both types are held to the same regulatory and fiduciary standards, and both are required to maintain robust compliance programs, supervisory procedures, and anti-money laundering protocols.
Building Integrity Through Oversight
The growing presence of broker-dealers in EB-5 is one of the most positive developments since the 2022 Reform and Integrity Act (RIA).
By applying traditional financial compliance principles to a complex immigration-linked investment, the broker-dealer model strengthens every stage of the investor experience:
- Before investment: ensures clear, accurate marketing and disclosure of all material risks.
- At investment: documents investor’s suitability, financial condition, and understanding of at-risk capital.
- After investment: provides consistent communication, updates, and recordkeeping throughout the life of the EB-5 project.
These measures not only safeguard investors but also enhance the program’s credibility with regulators and policymakers — helping ensure EB-5’s long-term sustainability.
The Investor Takeaway
For investors, the key message is simple: EB-5 investments are regulated securities, and compliance is your first line of protection.
Working with a broker-dealer means working within a system designed to protect your interests — from the moment you consider a project to the day your investment is repaid and your immigration goals are achieved.
As CanAm’s leadership often emphasizes, the goal isn’t just to meet compliance requirements — it’s to set the standard for how EB-5 should operate: with integrity, transparency, and accountability.
Coming Next in the Series
Part 2 – Regulation Best Interest & Investor Suitability:
We’ll explore how the SEC’s Regulation Best Interest (Reg BI) has raised the bar for EB-5 brokers and advisors — and what it means for investors evaluating risk, suitability, and disclosure in today’s EB-5 market.
