How New Communist and Totalitarian Party “Membership” Rules Could Reshape EB-5 Risk Analysis

By Alex George Santhanam and Halston Chavez 

The legal landscape for EB-5 is shifting. The U.S. Department of State’s (DOS) recent updates to the Foreign Affairs Manual (FAM) represent a significant expansion of the admissibility rules regarding Communist and other totalitarian party membership and affiliation. ¹  

We will focus primarily on Communist Party affiliation, as this has the most impact on high-demand markets. However, the FAM also expands the definition of totalitarian party affiliation. EB-5 professionals should exercise the same level of due diligence when evaluating investors from countries with governments that DOS may consider presently or formerly totalitarian.  

WHAT CHANGES DID DOS INTRODUCE? 

The changes broaden the interpretation of “affiliation” under INA § 212(a)(3)(D), capturing not only formal membership, but also acts such as providing support, working for state-owned enterprises (SOEs), or expressing ideological alignment. Important updates to 9 FAM 302.5-6² include, but are not limited to: 

• Employment in or association with SOEs and other government-affiliated organizations is “generally” considered affiliation. The old FAM discussed service in the armed forces of Communist countries, but not employment in a state-owned or affiliated organization or enterprise. The new FAM states that such organizations in Communist countries are “often instruments of the ruling party used…to control civil society and carry out political objectives.” Therefore, employment or association with these entities “will generally constitute affiliation” with the ruling Communist or socialist party. 

• (Almost) no more non-meaningful association. Previously, the FAM cited two Supreme Court cases to demonstrate that membership in or affiliation with an organization did not constitute “meaningful association” if their membership was not for ideological reasons. For example, in Rowoldt v. Perfetto, 355 U.S. 115 (1957), the Supreme Court found that if an individual was a member for mere technical, social, or economic reasons, but did not intend to further the party’s ideological aims, that was not considered a meaningful association.  Now, the updated FAM cites the same case to claim that membership is generally intentional and that members are assumed to be aware of the party’s political nature. If that party is politically active, its members are “associated” with Communism. 

• Affiliation no longer requires positive action. In the previous editions of the FAM, an applicant was not considered affiliated with a Communist or other totalitarian party if they were interested in or favored the party’s ideology unless the same applicant also took positive, voluntary actions. For example, if the applicant was sympathetic to party ideology and took the additional step of providing monetary or other forms of value to the party, they were considered affiliated. Now, the mere “advocacy for, solidarity with, or endorsement of” party ideology is considered affiliation.  

• Socialist party membership is now considered Communist affiliation. In addition to Communist parties, the new FAM states that membership in a “socialist” party is considered affiliation with a Communist party if that socialist party advocates Communist political philosophy. The FAM specifically names the Socialist Unity Party of Germany, the Workers’ Party of Korea, the Korean Social Democratic Party, and the United Socialist Party of Venezuela as examples, but this does not appear to be an exhaustive list. Any socialist party that is “related to, or identified with” a Communist party because of its history, philosophy, and/or political objectives may be deemed “affiliated” with Communism. This expands the definition of affiliation and risk of inadmissibility for EB-5 investors from countries with socialist parties.  

• Multiple exceptions have been narrowed. 

• Essentials of Living: Previously, the FAM made an exception for Communist affiliation if an individual joined to gain access to “essentials of living.” This list included, but was not limited to, “housing, food rations, employment, medical and dental care, clothing, furnishings, transportation, and education.” Now, if an individual joined the party and participated more than the “minimal extent necessary” to access the essentials of living or received an economic advantage beyond the essentials of living, they no longer qualify for an exception.  

• Involuntary Membership: Before, membership or affiliation was considered involuntary when it was the result of “fraud, duress, coercion, incapacity, or error which impair or negate the capacity for affirmative and intentional action.” Now, that list has been narrowed to “fraud or duress, or occurred without the applicant’s knowledge.” The Department of State requires applicants to demonstrate, through clear and convincing evidence, that their membership was not voluntary at any point in time. 

• Failure to disclose membership can have severe consequences. The old FAM allowed consular officers to obtain missing information from applicants during the immigrant visa interview, including prior party membership. Now, if an applicant does not disclose membership on their immigrant visa forms, the consular officer could find the applicant inadmissible due to “material misrepresentation.” 

THE OVERLAP BETWEEN FAM AFFILIATION RULES AND RIA CAPITAL RESTRICTIONS 

For EB-5 investors, the implications may go beyond admissibility at the immigrant visa stage. The Reform and Integrity Act of 2022 (RIA) prohibits capital from being provided by — or indirectly linked to — foreign governments or their representatives in EB-5 projects:  

No agency, official, or other similar entity or representative of a foreign government entity may provide capital to, or be directly or indirectly involved with the ownership or administration of, a regional center, a new commercial enterprise, or a job-creating entity, except that a foreign or domestic investment fund or other investment vehicle that is wholly or partially owned, directly or indirectly, by a bona fide foreign sovereign wealth fund or a foreign state-owned enterprise otherwise permitted to do business in the United States may be involved with the ownership, but not the administration, of a job-creating entity that is not an affiliated job-creating entity. 

8 U.S.C. § 1153(b)(5)(B)(ii)(II); Pub. L. No. 117-103, Div. BB, §101(a)(2)(B)(ii)(II), 136 Stat. 49 (2022). 

The RIA expressly directed the Department of Homeland Security (DHS) to issue implementing regulations within 270 days of enactment of the law, which would have been by December 10, 2022.³ DHS missed that statutory deadline, and as of this writing, U.S. Citizenship and Immigration Services (USCIS) has not issued guidance with respect to this provision. This regulatory gap leaves practitioners and investors with uncertainty over how the foreign government capital restriction will be interpreted and enforced. 

In practice, this uncertainty highlights a potential twofold challenge: the very facts that raise concerns about political affiliation under the FAM could simultaneously complicate the investor’s lawful source of funds. 

HIDDEN PITFALLS PRACTITIONERS MUST ANTICIPATE 

There are various pitfalls that practitioners should anticipate and strategies that practitioners can employ to mitigate those risks. 

In many countries where the government either was previously or is currently considered Communist or totalitarian by DOS, the government is deeply embedded in the economy. Even sectors that appear private may be partly owned, managed, or influenced by the state.  

Many EB-5 professionals already screen for Communist Party membership. But the new FAM requires much more detailed review — looking for indirect affiliations, ideological endorsements, and even symbolic ties. Below are some less obvious scenarios that could now present additional challenges: 

• Employment in “commercial” arms of the state. Some investors work for companies that appear private but are majority-owned by government investment vehicles. Without a careful ownership history review, practitioners may miss the risk. 

• Post-service promotions. A military veteran promoted to a civilian leadership role within a state ministry may be viewed as maintaining an active affiliation. 

• Party membership through family or education. In some countries, university students automatically join youth Communist organizations, which could be construed as past (or present) affiliation. 

• State-connected NGOs or trade associations. Organizations presented as independent may in fact be extensions of the ruling party or government policy apparatus. 

• Diplomatic or “official” passports. Even if issued only for work travel, these can be viewed as evidence of government representative status. 

• Social media activity. Investors are required to provide social media handles on their Forms DS-260. Posts, comments, and even likes could be construed as sympathy with Communist or socialist party ideology.  

THE EXPANDED DUE DILIGENCE MANDATE: STRATEGIC INTAKE AND QUESTIONNAIRES 

To address these risks, practitioners should overhaul client intake processes. Simply asking, “Have you ever been a member of the Communist Party?” is no longer sufficient. Instead, comprehensive questionnaires should include: 

• Detailed employment mapping. For each job in the client’s history, have them identify the employer’s ownership at the time, including indirect ownership through state holding companies. Questions specific to service in ministries, SOEs, or quasi-governmental bodies, even in junior roles, should be included. 

• Complete education history examination. For each school, request the full name of the university or college, including any former names, years attended, and degree(s) earned. 

• Military history breakdown. Questions should include branch, rank, duties, whether the individual received espionage training beyond that of a typical service member, and whether the role involved political education or enforcement. 

• Affiliated organization analysis. Document the funding sources and governance structures of NGOs, academic institutions, and trade associations linked to the investor and/or the investor’s EB-5 funds. 

• Travel document review. Request copies of any diplomatic or official passports issued, even if not currently valid. 

• Political activity log. Capture any participation in rallies, campaigns, or public endorsements of party policies, both in person and online. 

This level of inquiry is critical not only for FAM admissibility assessments, but also for evaluating whether the source of EB-5 capital is free from prohibited government ties. Where uncertainty exists, practitioners should document the analysis and communicate the risks clearly, allowing the investor to make an informed decision. 

OTHER RISK MITIGATION STRATEGIES FOR PRACTITIONERS 

In this environment, best practices include: 

• Front-loading affiliation screening. Identify potential inadmissibility or RIA risks before filing the I-526E to avoid sunk costs and, should they choose to proceed, prepare applicants for the intense level of detail and documentation the EB-5 process requires.  

• Discuss source of funds strategies. Discuss the various sources of funds options an investor may have and the pros and cons of each. 

• Documenting privatization timelines. If an employer transitioned from government to private ownership, obtain proof of the change and date it clearly. 

• Exploring waiver eligibility. Exceptions exist for involuntary membership, limited participation, or early termination, but evidence must be gathered early and meet a rigorous standard. 

• Engage local counsel for documentation. In some countries, obtaining credible proof of privatization or separation from the state requires in-country expertise. 

• Prepare for consular unpredictability. Even if USCIS approves the I-526E petition, anticipate additional document requests or interviews at the green card or immigrant visa stage. 

• Communicating risks in writing. Where uncertainty remains, practitioners should memorialize their analysis so the investor understands the potential consequences. Practitioners should keep clear records of their communications with the investor in case questions or misunderstandings arise in the future.  

WHY EARLY SCREENING MATTERS MORE THAN EVER 

The consequences of failing to identify these risks at the outset are severe. Investors could spend years and thousands of dollars on the EB-5 VISA program only to be refused at the immigrant visa stage, which harms both the investor and the practitioner’s reputation. Early, thorough screening not only protects clients’ interests but also safeguards the credibility of EB-5 projects. 

In high-risk markets, agents and intermediaries should be trained to identify potential affiliation and government capital issues before referring clients. This is especially critical in countries with mandatory military or civil service, where affiliation is common and often unavoidable. 

LEGAL COUNSEL MUST BUILD STRONGER EVIDENCE FOR EB-5 CLIENTS 

When the updated FAM rules on Communist affiliation meet the RIA’s foreign government capital restrictions, it makes the compliance environment more complex for EB-5 practitioners. By asking more in-depth questions, thoroughly tracking the source of funds, and proactively evaluating waiver eligibility, attorneys can build a stronger evidence record and protect their clients from unnecessary complications and long-term immigration issues. 

¹ This article focuses primarily on Communist Party affiliation, as this has the most impact on high-demand markets. However, the FAM also expands the definition of totalitarian party affiliation. EB-5 professionals should exercise the same level of due diligence when evaluating investors from countries with presently or formerly totalitarian governments.

² https://fam.state.gov/fam/09FAM/09FAM030205.html  

³ EB-5 Reform and Integrity Act of 2022, Div. BB, §104(a), Pub. L. No. 117-103, 136 Stat. 49 (2022) (“Not later than 270 days after the date of the enactment of the EB–5 Reform and Integrity Act of 2021, the Secretary shall issue regulations implementing subparagraphs (I) and (II)”); 8 U.S.C. § 1153(b)(5)(D)(ii)(III) (“Not later than 270 days after March 15, 2022, the Secretary shall issue regulations implementing subparagraphs (I) and (II)”). 

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