Nonimmigrant Investors: Actions Needed to Improve E-2 Visa Adjudication and Fraud Coordination
Released: 2019-07-17T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: Foreign nationals from 82 countries may obtain E-2 nonimmigrant investor status in the United States. The E-2 nonimmigrant classification allows an eligible foreign national to be temporarily admitted to the United States to direct the operations of a business in which they have invested a substantial amount of capital, or to work in an approved position (e.g., manager or essential employee). To obtain E-2 status, a foreign national can apply through State for an E-2 visa abroad, or if already in the United States, by petitioning USCIS to extend or change to E-2 status.

GAO was asked to review State's and USCIS' E-2 adjudication process. This report addresses: (1) outcomes and characteristics of foreign nationals who sought or received E-2 status from fiscal years 2014 through 2018, (2) policies and procedures for ensuring that individuals meet E-2 eligibility requirements, and (3) efforts to assess and address potential E-2 fraud. GAO analyzed State and USCIS data on E-2 adjudications, generalizable samples of E-2 visa applications and petitions, and relevant documents. GAO interviewed officials at 14 State posts abroad, selected based on E-2 application volume and other factors, and observed E-2 adjudications at four of these posts and USCIS's California Service Center.

section_title: What GAO Found
paragraphs: The Department of State (State) and U.S. Citizenship and Immigration Services (USCIS) annually adjudicated about 54,000 visa applications or petitions from fiscal years 2014 through 2018 for foreign nationals seeking E-2 nonimmigrant status, over 80 percent of which were approved. About eighty percent of E-2 adjudications were for State visa applications, and the remaining 20 percent were for USCIS petitions to extend or change to E-2 status. Generally, about half of the foreign nationals seeking E-2 status were investors, managers, or essential employees of an E-2 business, and the other half were their spouses or children.

State and USCIS have guidance, procedures, and training intended to help consular and immigration officers ensure foreign nationals meet E-2 eligibility requirements; however, officials GAO interviewed from both agencies identified challenges in the E-2 adjudication process.

State. Consular officers noted that E-2 visa adjudications are complicated and resource-intensive, often requiring more documentation and time to complete than other visas. For example, the requirement that the investment in the business be substantial does not prescribe a minimum capital amount. Rather, the investment must be large enough to support the likely success of the business, among other criteria. Consular officers at 10 of 14 posts GAO interviewed indicated that determining the investment's substantiality is difficult for newly encountered business types. Providing additional E-2 training or related resources would help ensure that consular officers and locally employed staff have the necessary knowledge and abilities to carry out their responsibilities.

USCIS. Officials identified similar challenges with respect to E-2 adjudications. However, officials stated that colocating immigration officers who adjudicate E-2 petitions helps to mitigate the challenges because the officers can communicate with each other on how USCIS has typically adjudicated such cases.

State and USCIS have resources to address E-2 fraud, which includes submitting falsified documents or making false statements material to the adjudication; however, coordination on E-2 anti-fraud efforts is limited. State has anti-fraud efforts in place for all nonimmigrant visa types, but State officials stated that they consider E-2 visa fraud to be lower risk compared to other visas because the large amount of complex paperwork required for the E-2 visa discourages malicious actors. USCIS officials consider E-2 fraud to be a significant issue and have taken steps to identify fraud, such as using fraud assessment technology to determine if a business is financially viable and conducting site visits if fraud is suspected. Both State and USCIS collect information that could be useful to each other's anti-fraud efforts, but interagency coordination on E-2 fraud issues is ad hoc and relatively rare. For example, the main formal mechanism of coordination on E-2 visa issues—a quarterly teleconference—was cancelled 7 out of 8 times in fiscal years 2017 and 2018. Coordinating regularly on fraud issues, which is a best practice from GAO's Fraud Risk Framework, will help both entities to better identify emerging E-2 fraud trends and areas for potential resource sharing.

section_title: What GAO Recommends
paragraphs: GAO is making five recommendations, including that State provide more E-2 training or resources to consular officers, and that State and USCIS establish a regular coordination mechanism to share information on E-2 fraud risks. State and USCIS concurred with all five recommendations.

section_title: Letter
paragraphs: According to the Department of Commerce, foreign direct investment  contributed over $4 trillion to the U.S. economy in fiscal year 2017. One  source of foreign direct investment is from foreign nationals of 82  countries (treaty countries) who may obtain E-2 nonimmigrant status in  the United States. The E-2 nonimmigrant classification allows a foreign  national of a treaty country (investor) to be temporarily admitted to the  United States solely to develop and direct the operations of a U.S.  business in which he or she has invested a substantial amount of capital.  E-2 status may also be available to other individuals who share the  investor’s treaty country nationality and are working for the business,  such as an employee in an executive or supervisory position (manager)  or an employee having special qualifications essential to successful or  efficient business operations (essential employee). Furthermore, the  spouse and children (dependents) of an E-2 investor, manager, or  essential employee are also eligible for E-2 status.

There are two pathways for an individual to obtain E-2 status: (1) by  applying through the Department of State (State) for an E-2 visa at a U.S.  embassy or consulate abroad (posts) and then being inspected and  admitted at a U.S. port of entry by the Department of Homeland Security’s  (DHS) U.S. Customs and Border Protection (CBP), or (2) if already in the  United States in E-2 or another nonimmigrant status (e.g., business visitor  or student), by petitioning for a change to, or extension of, E-2 status  through DHS’s U.S. Citizenship and Immigration Services (USCIS). As  with other immigration benefits, State consular officers and USCIS  immigration officers are tasked with ensuring that E-2 status is not  granted to ineligible individuals, including those engaging in fraud, such  as using counterfeit identity documents or making false claims material to  the adjudication process. Additionally, CBP is responsible for inspecting  all E-2 visa holders at U.S. ports of entry to determine their admissibility  for an authorized period of stay.

Consistent with the Immigration and Nationality Act (INA), prospective E-2  nonimmigrants must meet several eligibility requirements. For example,  the E-2 investor, manager, and essential employee must be a national of  a country with which the United States maintains treaties of commerce  and navigation. Further, although there is no prescribed minimum  investment amount, the investor must place a “substantial” amount of  capital “at risk” (i.e., subject to total or partial loss).

You asked us to review State’s and USCIS’s oversight and  implementation of the E-2 adjudication process. This report examines (1)  the outcomes and characteristics of foreign nationals who have sought or  received E-2 status during fiscal years 2014 through 2018, (2) State and  USCIS policies and procedures to ensure that individuals meet E-2  eligibility requirements, and (3) State and USCIS efforts to assess and  address potential fraud in the E-2 adjudication process.

To determine the outcomes and characteristics of foreign nationals who  have sought or received E-2 status, we analyzed data from State’s  Bureau of Consular Affairs and USCIS on E-2 visa applications and  petitions adjudicated from fiscal years 2014 through 2018. To assess the  reliability of the E-2 data, we interviewed State and USCIS officials who  maintain the data and checked the data for missing information, outliers,  and obvious errors, among other actions. On the basis of these steps, we  determined that the data were sufficiently reliable for the purposes of our  reporting objectives, including providing summary statistics on E-2  adjudications, outcomes, and the characteristics of those seeking E-2  status. We also analyzed generalizable stratified random samples of E-2  visa applications from State and E-2 petitions from USCIS adjudicated in  fiscal year 2018 to gather additional information, such as information on  types of businesses and investment amounts. Specifically, we reviewed  120 E-2 visa applications and 124 E-2 petitions from USCIS for E-2  investors, managers, and essential employees. We chose sample sizes  to achieve precision levels for a percentage estimate of plus or minus 10  percentage points for important sub-populations, such as denied petitions  and role (e.g., investor, manager, and essential employee).

To assess State and USCIS policies and procedures to ensure that  individuals meet E-2 eligibility requirements, we reviewed relevant  provisions of the Immigration and Nationality Act and implementing  regulations, and State and USCIS guidance, such as State’s Foreign  Affairs Manual (FAM) and USCIS’s E-2 standard operating procedures.  We also interviewed officials from State’s Bureau of Consular Affairs and  Foreign Service Institute, and USCIS on their respective agencies’ E-2  processes and procedures, as well as training. Further, we assessed  State’s and USCIS’s policies and procedures for ensuring that individuals  meet E-2 eligibility requirements against control environment, control  activities, and monitoring internal control standards in Standards for  Internal Control in the Federal Government, as well as documentation  retention requirements in agency guidance.

E-2 Adjudication Definitions  Prescreening: The review of a visa  application by consular officers and locally  employed staff prior to the applicant’s  interview. It can include processing steps,  such as reviewing applicant documentation for  completeness, as well as more analytical  tasks, such as developing interview questions  and summary notes and conducting research  on the applicant and business using available  databases and resources. However, only  consular officers can adjudicate visa  applications.

We conducted site visits to State and USCIS locations that adjudicate E-2  visa applications and petitions, respectively. For State, we conducted site  visits from October through December 2018. For our site visits, we  selected four posts that (1) were among the 10 highest E-2 adjudicating  posts by volume in fiscal year 2017, (2) had different staffing models for  E-2 visa adjudications, and (3) were geographically dispersed. During  these visits, we observed the processing, prescreening (see sidebar), and  adjudication of E-2 applications, and interviewed consular officials and  locally employed staff (LES), among others, about E-2 visa adjudication  policies, procedures, resources, and training. Our observations from  these site visits provided useful insights into State’s E-2 adjudication  procedures, but are not generalizable to all posts that adjudicate E-2  visas. For USCIS, in November 2018, we visited the California Service  Center in Laguna Niguel, California—which is the only USCIS service  center that adjudicates E-2 petitions—to observe E-2 adjudications and  interview USCIS officials. In addition to our site visits, we conducted  telephone interviews with State consular officers and LES responsible for  prescreening and adjudicating E-2 visa applications at the remaining 6 of  the top 10 posts in terms of E-2 annual adjudications, as well as 4  randomly selected low-volume posts. Further, we reviewed written  responses from consular managers at these 14 posts to a set of  questions regarding E-2 adjudication processes and procedures,  challenges, E-2 company registration programs, and E-2 training.

E-2 Adjudication Definitions  E-2 fraud: E-2 fraud is a type of immigration  benefit fraud that involves the willful or  knowing misrepresentation of material facts  for the purpose of obtaining E-2 nonimmigrant  status, for which the person committing fraud  is therefore ineligible. Such  misrepresentations may involve a specific  intent to deceive. Immigration benefit fraud is  often facilitated by document fraud and  identity fraud. Immigration-related document  fraud includes forging, counterfeiting, altering,  or falsely making any document, or using,  possessing, obtaining, accepting, or receiving  such falsified documents in order to satisfy  any requirement of, or to obtain a benefit  under the Immigration and Nationality Act.  Identity fraud refers to the fraudulent use of  others’ valid documents.

To determine the efforts that State and USCIS take to assess and  address potential E-2 fraud, we reviewed relevant State and USCIS   standard operating procedures and guidance. We interviewed  headquarters officials from State and USCIS, including those from State’s  Fraud Prevention Program and USCIS’s Fraud Detection and National  Security Directorate, on how both agencies identify and address potential  E-2 fraud and what, if any, coordination or information sharing occurs  between State and USCIS. During our four site visits abroad, we  interviewed officials, such as State’s fraud prevention managers and  assistant regional security officer-investigators (ARSO-I), on anti-fraud  efforts for E-2 visas at their posts, including potential fraud trends.  Similarly, we interviewed immigration officers at USCIS’s California  Service Center on their anti-fraud efforts for E-2 petitions. We obtained  data from State and USCIS on fraud referrals—that is, cases sent to fraud  experts for additional research and review—and the results of fraud site  visits from fiscal years 2014 through 2018. To assess the reliability of  these data, we interviewed State and USCIS officials who maintain the  data and checked the data for missing information, outliers, and obvious errors. We determined that the data were sufficiently reliable to provide  summary statistics on fraud referrals and the results of fraud site visits.  Further, we assessed State’s and USCIS’s anti-fraud efforts against best  practices for fraud coordination found in A Framework for Managing  Fraud Risks in Federal Programs. Additional details regarding our  objectives, scope, and methodology are provided in appendix I.

We conducted this performance audit from July 2018 to July 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Roles and Responsibilities for State and DHS Components
paragraphs: Several State and DHS components have roles and responsibilities in the  E-2 adjudication process, as shown in Table 1.

Depending on which agency (State or USCIS) is conducting the E-2  adjudication, as well as the foreign national’s role in relation to the E-2  business, foreign nationals are described using various terms, as shown  in table 2.

section_title: E-2 Eligibility Requirements
paragraphs: Both the business and foreign national seeking E-2 status must meet  specific eligibility requirements, as shown in table 3. The E-2 eligibility  requirements for nationals of treaty countries and their qualified family  members (i.e., dependents) are defined in the INA, as amended, as well  as in federal regulation. Foreign nationals seeking E-2 status must  provide evidence and supporting documentation to State’s consular  officers or USCIS’s immigration officers showing that they and their  related business meet these requirements.

section_title: E-2 Nonimmigrant Adjudication Processes
paragraphs: There are two pathways for an individual seeking E-2 status: (1) applying  for an E-2 visa through State at a post abroad, and then being inspected  and admitted at a U.S. port of entry by CBP, or (2) filing with USCIS to  extend, or change to E-2 status if already in the United States in E-2 or  other nonimmigrant status, as shown in figure 1.

Prior to the expiration of the 2-year period typical for E-2 nonimmigrants,  a foreign national seeking to remain in E-2 status must either petition  USCIS for an E-2 extension; or depart the country, reapply for an E-2 visa  with State at a U.S. embassy or consulate, and seek entry at a U.S. port  of entry. However, if the E-2 visa is still valid after having departed, the  foreign national may present that visa to apply for admission again at a  U.S. port of entry.

If applying through State, consular officers are responsible for  adjudicating E-2 visa applications at one of State’s 220 posts. Although all  posts can adjudicate E-2 visas, approximately 140 posts adjudicated at  least one E-2 visa in fiscal year 2018.

section_title: State and USCIS Adjudicated About 54,000 E-2 Visa Applications or Petitions Per Year From Fiscal Years 2014 through 2018; Roles, Business Sectors, and Countries Varied
paragraphs: Taken together, State and USCIS adjudicated an annual volume of E-2  visa applications or petitions of more than 50,000 from fiscal years 2014  through 2018. State accounted for over 80 percent of these adjudications.  About 90 percent of State’s E-2 visa applications were issued, and about  83 percent of USCIS’s E-2 petitions were approved. See appendix III for  additional State and USCIS data on the characteristics of foreign  nationals seeking E-2 status, including annual statistics, the relatively low  number of E-2 nonimmigrants who remain in the United States beyond  the conclusion of their authorized period of stay (i.e., overstay), and other  post-adjudication outcomes.
subsections: section_title: State Adjudicated About 45,000 E-2 Visas Annually, About 90 Percent of Which Were Issued
paragraphs: The volume of State’s E-2 visa adjudications increased from fiscal years  2014 through 2017, and decreased slightly in fiscal year 2018, as shown  in figure 2. During this time period, State consular officers adjudicated an  average of about 45,000 E-2 visas per year. Also during this time period,  44 percent of adjudications were for dependents, and a combined 53  percent were for principals, including 14 percent for the investor, 20  percent for managers, and 19 percent for essential employees.

From fiscal years 2014 through 2017, the average E-2 visa refusal rate— that is, the number of refused visas divided by the total number of visas  adjudicated during that time period—was about 8 percent, which is  generally lower than for other types of nonimmigrant visas (see sidebar).  We do not present the fiscal year 2018 refusal rate in figure 3 because  that rate is subject to change until the end of fiscal year 2019.  Specifically, an application adjudicated in fiscal year 2018 may require the  applicant to submit additional information to demonstrate eligibility for an  E-2 visa. In such cases, the application is refused under INA § 221(g).  The applicant has one year after the date of refusal to overcome the  refusal by, for example, providing missing or supplemental information.  After one year, the applicant must reapply. As of November 2018, 8,184  of the 11,255 refusals in fiscal year 2018 were refused under INA §  221(g). Depending on the extent to which applicants refused in fiscal year  2018 under INA § 221(g) are able to overcome their refusals, State  officials stated that they expected the fiscal year 2018 refusal rate to be  similar to prior fiscal years.

In addition to analyzing State data on adjudications and refusals, we also  analyzed data to identify trends in refusal rates by applicant type, refusal  reasons, nationality of applicants, and business sectors, and level of  investment, as described below.

Refusal Rates by Applicant Type. Our analysis showed that for fiscal  years 2014 through 2018, average refusal rates were highest for  investors (24 percent), followed by dependents (12 percent), managers (9  percent), and essential employees (6 percent). Figure 4 shows the  refusal rates by fiscal year for each applicant type, and appendix III  includes additional information on refusal rates for fiscal year 2018.  According to State officials, refusal rates may be higher for investors  because such applicants are typically the first in their company applying  for an E-2 visa; if denied, then future E-2 applicants (e.g., manager or  essential employee) would need to wait until such investor is approved or  find another individual or business investor to form the basis for their E-2  employment status.

Refusal Reasons. Our analysis showed that approximately 10 percent of  E-2 visa adjudications from fiscal years 2014 through 2017 were  refused. The majority of E-2 visa refusals for fiscal years 2014 through  2017 (75 percent) were because the applicant did not meet eligibility  requirements. The next largest reason for refusal (22 percent) was INA  § 221(g) for inadequate documentation. Few E-2 visa applicants are  refused for other reasons, such as prior immigration violations, fraud, or  terrorist activities. For example, in total, less than 4 percent of all E-2 visa  adjudications during this time period were refused for other reasons, such  as security or criminal-related ineligibilities, fraud or misrepresentation,  and immigration violations, among others.

Nationality. Our analysis showed that about 80 percent of E-2 visa  adjudications from fiscal years 2014 through 2018 were for nationals from  nine countries: five European countries (Germany, France, United  Kingdom, Italy, and Spain), two Asian countries (Japan and South Korea),  and two North American countries (Canada and Mexico). Japan was the  largest country of nationality, with 29 percent, followed by Germany (10  percent), Canada (7 percent), and France (7 percent). Figure 5 shows the  top ten countries by percentage of E-2 visa adjudications from fiscal years  2014 through 2018.

Business Sectors. To obtain information on additional characteristics of  E-2 visa principal applicants (i.e., investor, manager, and essential  employee), such as their business sector and investment amounts, we  reviewed a generalizable sample of 120 fiscal year 2018 E-2 visa  applications. Based on our analysis, we estimate that about three- fourths of principal E-2 visa applicants were associated with 4 business  sectors: manufacturing (44 percent), food services (13 percent), retail (11  percent), and professional services (10 percent). Figure 6 includes  examples of the businesses we found within each of these sectors.

Investment. Based on information reported by fiscal year 2018 principal  applicants in our generalizable sample of issued visas, we estimate 64  percent of applications were for principal applicants associated with  investments reportedly over $10 million, as shown in figure 7. Of these,  30 of 40 applications were for those in the manufacturing sector,  particularly for the automotive sector, such as large automobile  manufacturers.

section_title: USCIS Adjudicated an Average of About 9,400 E- 2 Petitions Annually, 83 Percent of Which Were Approved
paragraphs: From fiscal year 2014 through 2018, USCIS adjudicated an average of  about 9,400 E-2 petitions per year. During this time period, USCIS  adjudicated petitions to extend E-2 status for an average of about 5,900  beneficiaries per year, about 60 percent of which were for E-2  dependents (i.e., an E-2 principal’s spouse or children). Also during the  same time period, USCIS adjudicated petitions for an average of about  3,500 beneficiaries per year who were seeking to change to E-2 status  from another nonimmigrant category. Of these, about 47 percent of which  were E-2 principal beneficiaries (i.e., investors, managers, and essential  employees). Figure 8 shows the number of petitions to extend or change  to E-2 status from fiscal years 2014 through 2018.

The average denial rate for E-2 petitions for fiscal years 2014 through  2018 was about 17 percent. Denial rates were higher for petitions to  change status from another nonimmigrant category to E-2 (27 percent)  than for petitions to extend E-2 status (11 percent), as shown in figure 9.  Further, the denial rate for both extension and change of status petitions  increased from fiscal years 2014 through 2017, but fell by several points  in 2018.

In addition to analyzing USCIS data on adjudications and denials, we also  analyzed data to identify trends in country of birth, prior status, date of  last U.S. entry, reasons for denial, business sectors, and level of  investment, as described below.

Country of Birth. Our analysis showed that the top countries of birth for  individuals seeking to extend their E-2 status from fiscal years 2014  through 2018 were South Korea, Mexico, and Japan, and the top  countries of birth for those seeking to change to E-2 status from another  nonimmigrant category were South Korea, Pakistan, and Turkey, as  shown in table 4. Although there are similarities with the top countries of  nationality for State E-2 visas (see previous figure 5), there are some  differences as well. For example, both Pakistan and Thailand are among  the top countries of birth for petitioning with USCIS to extend or change to  E-2 status, but are not among the top countries of nationality for State E-2  visas.

Prior status. Our analysis showed that individuals seeking to change to  E-2 status from another nonimmigrant category from fiscal years 2014  through 2018 were most often changing status from a tourist, business, or  student visa, as shown in figure 10. For example, more than half (53  percent) of all petitions to change to E-2 status were for beneficiaries that  were tourists (B-2) or business visitors (B-1). In addition, about 4 percent  of beneficiaries were seeking to change status within the E-2  classification. For example, a child or spouse of an E-2 investor may later  work at the company as a manager and therefore would need to petition  to change from dependent to principal E-2 status as a manager.

Date of last entry into the United States. On the basis of our review of  a generalizable sample of petitions of E-2 principals (i.e., investors,  managers, and essential employees), we estimate that one third of  principal beneficiaries had been in the United States since 2014 or earlier  at the time they sought to change to or extend E-2 status in 2018, some  as long as 18 years, as shown in figure 11. Such beneficiaries may  have changed status from other kinds of nonimmigrant status, or may  have requested to extend their E-2 status multiple times. There is no limit  on the number of times a foreign national may request to extend their E-2  status.

Reason for denial. On the basis of our review of a generalizable sample  of fiscal year 2018 denied petitions for E-2 principals, we estimate that the  top reasons petitions were denied included (1) the enterprise was not real  and operating, and (2) the investment was not substantial, as shown in  table 5. Of the denied petitions in fiscal year 2018, about one-third were  either withdrawn by petitioner or abandoned, meaning that the petitioner  did not respond to USCIS requests for additional evidence.

Business Sectors. On the basis of our review, we estimate that the  majority of E-2 principal beneficiaries were associated with 4 business  sectors, as shown in figure 12: food services (38 percent), retail (18  percent), manufacturing (9 percent), and professional services (13  percent). Comparing our two generalizable samples, a smaller  percentage of USCIS’s E-2 principal beneficiaries were associated with  manufacturing (44 versus 9 percent) and more with food services (13  versus 38 percent) than State’s E-2 principal visa applicants.

Investment. We estimate that about two-thirds of the approved petitions  were for principal beneficiaries associated with investments of $200,000  or less, as shown in figure 13. We found that about 30 percent of USCIS’s  E-2 principal beneficiaries were associated with investment amounts of  $100,000 or less and 7 percent were associated with investments over  $10 million.

section_title: State and USCIS Have E-2 Guidance and Procedures, But Officials Identified Challenges with Respect to E-2 Adjudication
paragraphs: State and USCIS have agency-specific guidance, procedures, and  training intended to ensure E-2 applicants and petitioners, respectively,  meet E-2 eligibility requirements. However, officials from both agencies  identified challenges in the E-2 adjudication process. Some of State’s  posts have developed E-2 company registration programs to help  streamline the E-2 adjudication process, but there are no minimum  standards for these programs, which may result in different processing of  companies and applicants across posts. Further, State and USCIS  require that consular and immigration officers retain certain  documentation for all E-2 applications and petitions; however, during our  case file review of E-2 applications and petitions adjudicated in fiscal year  2018, we found that State did not consistently retain all required  documents.
subsections: section_title: State and USCIS Have Agency-Specific Guidance and Resources, Procedures, and Training
paragraphs: State and USCIS have guidance and resources to help officers adjudicate  E-2 applications and petitions. Both agencies have similar high-level  procedures for adjudicating E-2 applications and petitions, but there are  some key differences in how each agency implements these procedures  based on their specific roles and responsibilities. Further, both agencies  provide their staff with some training on E-2 eligibility requirements.

Guidance and resources. State and USCIS have guidance and  resources available to staff who adjudicate E-2 visas and petitions to help  ensure that applicants and petitioners meet E-2 eligibility requirements.  Although the guidance documents have some minor differences, they are  based on the same eligibility requirements. For example, the main  guidance documents for State and USCIS—State’s Foreign Affairs  Manual (FAM) and USCIS’s national E-visa standard operating  procedures—both include the same eligibility criteria and provide  additional explanation on each of the eligibility requirements. State also  provides supplementary resources for consular officers on its intranet,  such as E-2 adjudication best practices, an adjudication guide, and case  studies. State and USCIS both provide headquarters-based legal  advisors and attorneys with whom officers can consult for case-specific  guidance. For example, a State consular officer at one post we visited  told us that he requested such assistance for an application from an  investor whose company had a particularly complex ownership structure  that made it difficult to determine if at least 50 percent of the company  was owned by nationals of a treaty country.

Adjudication procedures. State and USCIS high-level procedures for  adjudicating E-2 applications and petitions are generally similar, but there  are some key differences based on their specific roles and  responsibilities. As shown in figure 14, both agencies require foreign  nationals to submit an E-2 application or petition, and pay any relevant  fees. Additionally, both agencies vet individuals by conducting security  checks and reviewing submitted information to ensure that all E-2  eligibility requirements are met.

There are four key differences in State and USCIS procedures for  adjudicating E-2 visa applications and petitions:  Interviews. State requires in-person interviews of most E-2  applicants. According to USCIS officials, USCIS does not conduct  interviews of beneficiaries and petitioners because they do not have  the resources or facilities to do so. In any case, USCIS’s process for  adjudicating nonimmigrant visa petitions for foreign nationals who  have already been lawfully admitted into the United States, in E-2 or  other nonimmigrant status does not include an interview requirement.

Locally Employed Staff (LES) and E-2 Visa  Adjudication  Consular officers and managers stated that  LES play an important role in E-2 visa  processing and adjudication. LES are  employees hired under the local  compensation plan at a U.S. post overseas.  LES include foreign service nationals, U.S.  citizens residing abroad, third country  nationals, and eligible family members of  State employees. LES can provide the  institutional knowledge and expertise in E-2  visa issues, as consular officers rotate posts  every 2 years but LES do not rotate. Consular  managers at 4 of the 14 posts we interviewed  or visited stated that their post specifically  hired LES to work on E-2 visas because of  their specialized knowledge and backgrounds  in business or law. For example, a consular  officer may consult with LES on an application  to better understand the legal relationship  between two companies, as some LES have a  background or developed expertise in  financial law.

Locally Employed Staff (LES) initial processing and  prescreening. In addition to consular officers, State employs local  residents in its host country to help with consular services (see  sidebar). For example, at some posts State’s LES prescreen visa  applications before consular officers adjudicate the application.  Procedures for LES varied at the posts we interviewed and visited.  For example, LES at some posts provide administrative help and  processing—such as scanning application documents, checking  applications for completeness, and scheduling interviews. LES at  other posts provide additional analytical support—such as by  summarizing applications, completing eligibility checklists, and  maintaining databases on previously issued E-2 visas. Regardless of  the kind of help LES may provide at post, only consular officers  adjudicate E-2 visa applications and make decisions on whether or  not the visa is issued. The number of LES supporting E-2 visa  applications at the 14 posts we visited or interviewed ranged from one  part-time position to five full-time LES. Consular managers and  officers at all four of the posts we visited described the role of LES in  processing E-2 visas as critical (see sidebar). Although USCIS’  California Service Center has staff who assist with processing  petitions, such as by organizing folders with the petition materials,  immigration officers generally perform the analytical tasks themselves.

Staffing model. Depending on E-2 visa application volume, staffing  considerations, and workload arrangements, the number of consular  officers adjudicating E-2 visas at the 14 posts abroad we interviewed  ranged from one to six per post. Further, on the basis of our  observations and interviews with consular officials at 14 posts, we  found that State’s posts have generally developed three different  staffing models for adjudicating E-2 visa applications, as shown in  table 6. Consular managers stated that the kind of model used at a  post may depend on E-2 visa volume, as well as other factors. For  example, a consular manager at a post we visited explained that the  specialist model worked well at his post because it had a relatively low  volume of E-2 adjudications each year, which meant that a single  officer could focus on such visas. In contrast, a consular manager at a  post we visited that was staffed with a hybrid of generalists and  specialists had higher E-2 visa volume and stated that their model  allowed them to balance efficiency and specialization. For USCIS, a  specialized office of five immigration officers review and adjudicate all  E-petitions (including E-1 and E-2) at one location –USCIS’ California  Service Center, as of July 2018.

Training. State and USCIS provide training to their respective E-2  processing and adjudication staff on E-2 eligibility requirements. State’s  consular officers assigned to adjudicate E-2 visas receive the majority of  their adjudication training at post, with a brief introduction to E-2 visas  during a mandatory 6-week Foreign Service Institute training course  taken prior to serving as a consular officer overseas. According to Foreign  Service Institute officials, the course provides consular officers with an  overview of the various visa classes they may adjudicate, but focuses on  visas that all consular officers will address at post. Because E-2 visas are  not adjudicated at every post, and consular officers typically cannot  specialize in only one particular classification like USCIS counterparts  who have a dedicated E-2 unit, the course does not concentrate on that  visa classification. Instead, State relies on the individual posts to provide  training to prepare consular officers to adjudicate E-2 visas on an “as  needed” basis.

On the basis of our interviews and observations, we found that E-2  training programs for consular officers at post generally consist of three  components. First, consular managers and senior consular officers at  post provide the consular officer who will be adjudicating E-2 visa  applications for the first time with an overview of the E-2 eligibility  requirements along with any supplementary E-2 training resources, such  as illustrative examples of challenging E-2 visa cases the post has  previously adjudicated. Second, new consular officers are to observe  senior consular officers adjudicate E-2 visas for 1 to 3 weeks, which helps  the new officer to learn how the requirements are applied. Finally, new  officers adjudicate E-2 visas under the supervision of a senior consular  officer with experience adjudicating E-2 visa applications, with 100  percent of their adjudications reviewed by consular managers until  management determines that the new officer is proficient. As needed,  supervisors will meet with new officers to discuss specific adjudications,  including whether the officer properly documented their decision.

State’s E-2 training for LES is entirely at post. According to consular  managers and LES, LES training generally consists of a review of  eligibility requirements and supervision. First, new LES assigned to E-2  visa processing and prescreening receive an overview of the E-2 eligibility  requirements from a senior LES. According to LES we interviewed, the  overview of the eligibility requirements helps them to identify the types of  documents E-2 applicants typically submit to establish E-2 eligibility.  Second, new LES are observed by senior LES until management  determines that the LES is proficient at processing and prescreening.

As noted above, USCIS has staff dedicated to E-2 petitions and USCIS  provides training to new E-2 immigration officers that include the same  basic components as State, such as a review of eligibility requirements  and job shadowing. First, immigration officers who will work on E-2  adjudications receive 3 weeks of classroom training during which they  review the E-2 eligibility requirements. The classroom training is followed  by a 1-week practicum session where USCIS immigration officers apply  the classroom training to sample E-2 petitions. Specifically, immigration  officers explained to us that during the practicum they are given example  cases to which they are to apply their classroom training. After each  officer has adjudicated the example case, they discuss how each applied  the various E-2 eligibility requirements and reconcile any differences with  the assistance of the immigration supervisor facilitating the training.  Second, after the 4 weeks of training, USCIS immigration officers begin to  adjudicate E-2 petitions under the guidance of an E-2 immigration  supervisor. Third, new E-2 immigration officers have 100 percent of their  cases reviewed by their supervisor until they are deemed proficient.

section_title: State and USCIS Officials Identified Challenges in the E-2 Adjudication Process and State Officials Identified the Need for Additional Training
paragraphs: State’s consular officers and LES, as well as USCIS officials, stated that  given the complexity of adjudicating E-2 applications and petitions, and  the level of documentation and time required, the E-2 adjudication  process can present challenges with respect to the analysis of the E-2  eligibility requirements. Consular officers and LES we spoke with stated  that additional training on E-2 eligibility requirements would be beneficial.  USCIS officials said that while E-2 petitions can be challenging to  adjudicate, additional training was not necessary.
subsections: section_title: State Officials Identified Challenges and Training Needed for Adjudicating E-2 Visa Applications
paragraphs: Consular officers we spoke with noted that E-2 visa adjudications are  particularly complicated and resource-intensive, involving potentially  complex business issues, and often requiring more documentation and  time to adjudicate than is typically needed to adjudicate other visas.  Specifically, consular officers at 10 of 14 posts we interviewed stated that  E-2 visas are among the most difficult nonimmigrant visas to adjudicate  because of the amount of supporting documentation that is required to  demonstrate that both the business and applicant meet all eligibility  requirements, as well as the time required to prescreen and adjudicate  the application package. For example, E-2 application packages can  include 200 pages or more of supporting documentation, and include a  range of detailed business and financial documents (see sidebar).  Further, consular officers told us that it can take between 45 minutes to 4  hours to review a single E-2 application with its supporting documents.  Consular officers explained that, in contrast, other nonimmigrant visa  categories do not require the same amount of time or number of  documents to adjudicate. For example, business and tourism  nonimmigrant visas typically take less than 10 minutes to adjudicate and  do not require that any documentation be submitted by the applicant prior  to the adjudication.

Consular officers at the 14 posts we visited or interviewed identified  challenges with respect to the analysis of the E-2 eligibility requirements.  Table 7 provides examples of some of these challenges, as identified by  consular officers at the 14 posts.

Substantial investment requirement:   No prescribed minimum amount of capital,  although it must be substantial in proportion to  the cost of the business.  Sufficient to ensure the investor’s financial  commitment to the successful operation of the  business.  Large enough to ensure the likelihood of  success of the business.

Determining substantial investment. Consular officers at 10 of 14  posts indicated that it can be challenging to determine substantiality of  capital investment amounts. According to the FAM, there is no set  amount of capital which is considered substantial; instead, various  factors must be considered to ensure there is a large enough  investment to support the business. Consular officers noted that it can  be difficult to determine how much capital is needed to support the  many types of businesses that consular officers see in E-2  applications, which can range from small restaurants to technology  start-ups to large automobile manufacturers. For example, a consular  officer may be presented with an application for an investor seeking  an E-2 visa to open a business that the consular officer has never  seen before in an E-2 visa application, such as an airport internet café  that rents hourly sleeping pods to travelers on long layovers. The  consular officer may be initially unfamiliar with what is considered to  be a more unique type of business, and may not know immediately  how much investment would be sufficient to ensure the successful  operation of the business. In such cases, the officer might gather  additional information from the applicant on similar businesses, which  the officer could use to inform their determination as to the amount of  capital that would be needed to support successful operation of the  business in the United States.

Real and operating business requirement:   The business is a real and active commercial  or entrepreneurial undertaking that produces  goods (i.e. commodities) or services for profit,  and meets applicable legal requirements for  doing business in the particular jurisdiction of  the United States.

Determining real and operating business. Consular officers at 7 of  14 posts indicated that it can be challenging to determine whether the  business is real and operating. Consular officers explained that  particularly difficult issues may arise for new businesses, which may  not be operational yet at the time of the interview. Consular officers  stated that it can be very clear when a business is not yet operating,  but that additional analysis is required for newly-formed businesses  that do not yet have customers or revenue but may have taken other  actions to start the business. Consular officers at one post explained it  is sometimes very clear that a business is not operating because, for  example, the business has not yet made any contracts with clients,  does not have a website advertising its services, and has no evidence  of any expenses made on behalf of the business. As for newly-formed  businesses, consular officers at another post we visited provided a  hypothetical example of a restaurant whose owner had a lease for the  restaurant space, bought equipment, and hired employees, but had  not opened to customers yet because it was waiting for the chef to  receive an E-2 visa as an essential employee. The officers indicated  that in such a hypothetical scenario in which a business’s qualification  as an E-2 business depends on E-2 visa issuance of a key worker, it  may not be immediately clear without further analysis, whether such  business would be considered real and operating.

Manager requirement:   The individual is an employee in an executive  or supervisory position.

Determining manager qualifications. Consular officers at 6 of 14  posts indicated that it can be challenging to determine whether a  prospective manager had or will have sufficient executive or  supervisory duties to meet the E-2 managerial requirement. Consular  officers provided a hypothetical example in which a consular officer  may interview an applicant seeking an E-2 visa to become a manager  at a restaurant, but the applicant may not have any prior management  experience nor will she have any subordinates in the restaurant. Such  a situation may pose challenges to the consular officer to determine if  the applicant would be eligible for an E-2 visa as a manager. Officers  noted that the FAM requirements did not specifically state that the  applicant must have prior experience or subordinates to qualify as a  manager. In such situations, consular officers said they might  request additional information from the applicant about the restaurant,  her skills and experience, and the nature of her managerial role in the  business.

Essential employee requirement:   The individual is employed in a lesser  capacity than a manager, but possesses  special qualifications (i.e. skills and/or  aptitudes) essential to the business’  successful or efficient operations in the United  States.

Determining essential employee qualifications. Consular officers  at 6 of 14 posts indicated that it can be challenging to determine  whether a prospective essential employee has special qualifications  (i.e. essential skills or aptitudes). Consular officers noted that they can  ask questions and obtain information about the applicant’s specialized  skills, but that often further research is needed to determine if those  skills are essential to the business’ operations in the United States.  For example, an officer at one post we interviewed provided a  hypothetical example of a pet groomer seeking an E-2 visa as an  essential employee for a pet grooming service. Although one might be  skeptical that pet grooming is a specialized skill and that such an  employee would be considered essential, in such a situation, the  officer noted that he would likely conduct further research. In doing so,  he might determine that the applicant is a well-known expert who  specializes in grooming certain breeds of exotic or show animals, and  that the grooming service is planning to target that type of animal.

Other requirements. Consular officers told us that some of the other  E-2 eligibility requirements are not particularly challenging. For  example, consular officers at all 14 posts told us that it is relatively  straightforward to determine if the applicant has a clear intent to  depart the United States upon termination of E-2 status because  applicants typically provide an affidavit attesting to their nonimmigrant  intent. Further, consular officers stated that it is easy to determine if  the applicant is an eligible dependent because consular officers are  familiar with local identity information (e.g., birth and marriage  certificates) and there are no nationality requirements for dependents.

In addition to potential challenges with respect to the analysis of the  eligibility requirements, consular officers at 4 of 14 posts also identified  challenges in understanding business and financial documents that are  provided in support of an E-2 application. For example, at one post we  visited, a consular officer explained the challenges he faced in  understanding U.S. tax documentation and the differences between  various types of corporations. Further, consular managers at two posts  stated that officers without prior knowledge in basic business concepts  can find E-2 visa adjudication challenging when they first arrive at post. A  manager from a third post stated that the complexity of some E-2 visa  cases requires knowledge of business and finance acquired through  substantial experience or education.

More than marginal business requirement:   The investment must be made in a business  that has the capacity to generate more than  enough income to provide a minimal living for  the treaty investor or employee and family, or  has the present or future capacity (generally  within five years) to make a significant  economic contribution.

Although LES do not adjudicate visas, LES at 6 of 14 posts also indicated  that they had encountered challenges with respect to the analysis of the  E-2 eligibility requirements. For example, LES at one post indicated that it  can be challenging to determine whether a company is more than  marginal (see sidebar) because the size, type or investment sector of  each E-2 company presents unique facts and circumstances. LES at one  post told us that they needed additional examples of how applicants can  meet the various criteria, which would help the LES flag potential areas of  concern for the consular officer. Further, LES also expressed challenges  in understanding some business and financial aspects of prescreening.  For example, LES at two posts stated that determining the nationality of  large companies can be difficult because they need to trace back  ownership to the original, parent company, and that corporate structures  can be very complicated.

Given the complexity of adjudicating E-2 visas, the majority of consular  officers and consular managers we spoke with stated that additional  training and resources would be beneficial, such as online training,  conferences to share best practices, or documents clarifying eligibility  requirements. Specifically, consular officers at 9 of 14 posts and consular  managers at 8 of the 14 posts stated that additional E-2 training or  resources would be beneficial to consular officers. For example, a  consular manager at one post noted that the additional resources  provided on State’s intranet, such as the adjudication guide and case  studies, have already helped to improve clarity on the eligibility  requirements, but more resources and training are needed. Further,  consular managers at 4 posts stated that additional training related to tax  and business concepts would be useful. For example, one manager  stated that additional training on how to read and analyze U.S. tax returns  could be helpful to accurately evaluate a company’s overall financial  health and make a determination that a business meets the requirement  to be “more than marginal.”

Further, LES at all 14 posts in our review also stated that additional  training or resources would help them perform their responsibilities. For  example, LES at one post we visited stated that additional training and  resources that clarify the eligibility standards would allow them to better  prepare application packages for the consular officers to adjudicate.  Further, consular managers at 9 of the 14 posts in our review also stated  that additional training and guidance for LES would be helpful. For  example, one consular manager suggested that State develop an online  training course for both E-2 adjudicating officers and LES that reviews  common business documents. Another manager stated that a training or  workshop would provide opportunities to LES and E-2 adjudicating  officers to learn best practices from other posts that adjudicate E-2 visas.

Although State provides guidance and training on adjudicating E-2 visas,  consular officers, managers, and LES identified challenges in the E-2  adjudication process, such as ensuring adjudicators adequately  understand supporting financial and business documents. Many of these  officials indicated that given the complexity of E-2 adjudications,  additional training and resources would help them in making E-2 eligibility  determinations. State officials noted that eligibility requirements are  broadly defined so as to cover various business types and investment  amounts. According to the Standards for Internal Control in the Federal  Government, management establishes expectations of competence for  key roles to help the entity achieve its objectives, which requires that staff  have the relevant knowledge, skills, and abilities, needed to carry out their  responsibility. Such knowledge, skills, and abilities can be obtained by  on-the-job training, formal training, and other training resources, which  should be available to all staff performing such roles, regardless of their  post. Providing additional E-2 training or related resources would help  better ensure that all consular officers and LES prescreening and  adjudicating these visas have the necessary knowledge, skills, and  abilities to carry out their responsibilities effectively. Such training or other  resources should cover topics that include information on E-2 eligibility  requirements and how to understand business- and tax-related  documents.

USCIS Immigration Officers Identified Challenges in Adjudicating  Petitions and Noted Ways in Which They Address Them  USCIS immigration officers we spoke with communicated challenges with  respect to the analysis of E-2 eligibility requirements, but explained that  they are able to overcome these challenges with local resources. For  example, USCIS immigration officers indicated that it is sometimes  challenging to determine whether a prospective “essential employee” has  requisite special qualifications, or a business is “more than marginal.” For  example, immigration officers indicated that determining if an employee is  considered essential depends on the relevant facts and circumstances.  Further, immigration officers noted that the non-marginality eligibility  requirement can be difficult to determine in some cases because the  officer may have to project how successful the business will be in the  future. However, the immigration officers explained that their colocation  with all of the other immigration officers who adjudicate E-2 petitions  helps to mitigate the challenges because the officers can coordinate with  each other to determine how USCIS has typically adjudicated such cases.  Generally, the USCIS immigration officers stated that additional training  or resources for E-2 adjudication was not needed.

section_title: E-2 Company Registration Programs Create Processing Efficiencies at Some Posts But State Does Not Have Minimum Standards for Program Implementation
paragraphs: As of April 2019, 7 of the top 10 E-2 adjudicating posts worldwide have  implemented E-2 company registration programs. An E-2 company  registration program is a process by which posts assess companies  against applicable E-2 eligibility requirements. Companies that meet  eligibility requirements are placed on an approved or registered  companies list. Companies on the registered list do not have to be  reassessed for eligibility each time one of their employees seeks an E-2  visa, which creates processing efficiencies for these posts.

Consular managers stated that E-2 company registration programs are  intended to give consular officers reasonable assurance that a company  meets the minimum E-2 business and investment eligibility requirements,  allowing the adjudicating officer to focus the majority of their effort on  evaluating the applicant ‘s E-2 eligibility. In fact, we found that at posts  with E-2 company registration programs, the consular officer may not  need to collect or review any supporting documentation related to the  company prior to adjudicating the visa. In contrast, E-2 adjudicating posts  without an E-2 company registration program would assess both the  company and the applicant against the E-2 eligibility criteria each time  they review and adjudicate an E-2 visa application.

While State has identified E-2 company registration programs as a  potential best practice, these programs are not mentioned in the FAM and  State has not developed guidance or minimum standards for how these  programs should be implemented. Instead, State has permitted posts to  develop and implement their own registration programs, which has led to  variation in how the programs are implemented depending on post- specific factors. Specifically, we found that posts with E-2 company  registration programs varied in three ways:

Registration criteria: Three of the 7 posts with E-2 registration  programs require all companies to register, while the remaining 4  posts established criteria so that only certain companies can register,  such as large companies or companies with multiple E-2 visa  issuances. For example, at one post, only companies with more than  500 employees in the United States are allowed to register. At posts  that require all companies to register, the number of registered  companies ranged from approximately 2,200 to 4,000. At posts that  allow only certain companies to register, the number of registered  companies ranged from about 100 to 200.

Documentation requirements: Employees of E-2 registered  companies seeking to obtain an E-2 visa provide different types of  documentation during their E-2 adjudication, depending on the  requirements of the post. For example, at two posts, applicants of  registered E-2 companies must provide their resume and a company  letter that outlines the applicant’s specific role within the company,  and do not need to provide any other supporting documentation  regarding the company or underlying investment. At these posts,  consular officers review their E-2 company registration database to  ensure that the company in question is registered with the post’s E-2  company registration program.

Revetting policy: Two of 7 posts with E-2 company registration  programs vet registered companies annually while the remaining five  posts vet companies every 5 years. Consular managers added that if  changes, such as changes in ownership, occur without the post  knowing it, prospective applicants may no longer be eligible for the  visa. However, according to consular managers, companies on the list  are required to contact their post sooner than the 5- or 1- year  renewal period if there are any changes in the company that would  impact visa eligibility for company investors or employees.

Although such programs may allow posts to more efficiently adjudicate E- 2 visas, the variation in these programs may result in different processing  of companies and applicants across posts, as well as acceptance of  varying levels of risk by posts. The more time a post allows companies  before reassessing the company’s eligibility for registration, the more risk  that post is assuming, as the companies may no longer meet the eligibility  requirements and continue to send or keep employees in the United  States on E-2 visas for which they are not eligible. According to  Standards for Internal Control in the Federal Government, management  should design and implement policies and procedures that enforce  management’s directives to achieve the entity’s objectives and address  related risks.  However, State’s Bureau of Consular Affairs has not  provided posts with minimum standards governing the implementation of  E-2 company registration programs, and thus, it is unclear whether the  variations among these programs are consistent with the agency’s  requirements and objectives. Establishing minimum standards for posts  that choose to implement such programs would better ensure that all  posts’ E-2 visa adjudication processes are aligned with State’s policies,  objectives, and risk tolerance.

section_title: Some State E-2 Application Documents Were Not Retained as Required
paragraphs: State and USCIS require certain information and documents be retained  for all E-2 applications and petitions; however, during our file review of  State and USCIS E-2 adjudications, we identified that some required  documents were missing from State files; USCIS was able to provide  copies of all the documents required to be retained for each file we  reviewed.

State. State’s FAM includes requirements related to the collection of E-2  visa application information for all E-2 principals (i.e. investors, managers,  and essential employees). Principal investors provide their information  when they complete their application online, which is automatically  uploaded to State’s consular database system. However, managers and  essential employees provide some information by completing a paper  form DS-156E, and the FAM requires officials to scan the forms each  applicant’s record.

On the basis of our file review, we estimate that about 20 percent of fiscal  year 2018 E-2 application files for managers and essential employees  were missing required documentation, either in part or in full.  Specifically, 14 percent of E-2 applications were missing the entire DS- 156E, and 8 percent (6 of 80) were missing pages of the DS-156E.  According the Standards for Internal Control in the Federal Government,  management performs ongoing monitoring of the design and operating  effectiveness of the internal control system as part of the normal course  of operations. Ongoing monitoring includes regular management and  supervisory activities. According to State officials, the responsibility for  ensuring that document retention is consistent with standards rests with  posts, and consular managers are responsible for ensuring compliance.  State officials noted that the Bureau of Consular Affairs does not have an  ongoing monitoring process in place to ensure that posts are complying  with the FAM requirement. Developing a process to ensure that posts are  retaining all required E-2 visa documentation by monitoring  implementation of the requirement could better position State to be able  to access applicant information, should it be needed for law enforcement,  anti-fraud, or security purposes later.

USCIS. According to USCIS officials, USCIS requires the I-129 petition,  supporting documentation, and decision letters for refused petitions to be  retained for all petitioners. As part of our review of petition files, we  requested 124 randomly selected fiscal year 2018 petition files for  investors, managers, and essential employees. In response, USCIS  was able to provide us with all of the required elements for each of the  petition files.

section_title: State and USCIS View Risk of E-2 Fraud Differently and Interagency Coordination On E-2 Fraud Efforts Is Limited
subsections: section_title: State Has Resources Available to Consular Officers to Help Identify Potential Fraud, but State Generally Considers E-2 Visa Fraud to Be Low Risk
paragraphs: State has resources to help combat nonimmigrant visa fraud, including for  E-2 visas. State officials said that the resources available and the steps  they take if E-2 fraud is suspected are similar for all types of visa fraud. If  a consular officer reviewing an E-2 visa application suspects fraud— either during prescreening or after the interview—the officer is to make a  fraud referral to the post’s fraud prevention manager or to diplomatic  security officials. According to State officials, not every case with potential  fraud concerns will be referred for additional investigation. If a consular  officer does not find the applicant to be qualified or overcome immigrant  intent, officers may refuse the case without additional fraud  assessments. Fraud prevention managers, who are part of State’s Bureau of Consular Affairs, investigate fraud cases and provide  information on fraud trends to consular officers. At some posts, State’s  Bureau of Diplomatic Security’s ARSO-Is specialize in criminal  investigations of visa fraud and coordinate with local law enforcement.  Both fraud prevention managers and ARSO-Is are to conduct additional  research to determine if fraud exists, such as through open source  searches, interviews, and coordination with other U.S. and local  government entities.

State officials we spoke with stated that they take fraud in all visa fraud  categories seriously, but generally consider E-2 visa fraud to be lower risk  relative to other visa categories because they believe the large amount of  complex paperwork required for the visa would discourage malicious  actors. For example, consular officers at 12 of the 14 posts we  interviewed stated that E-2 visas were a low fraud risk. Similarly,  consular managers at 10 of the 14 posts stated that E-2 visa fraud was  generally not a concern at their post. State headquarters officials  attributed the low fraud risk to the large amount of paperwork that is  required, which includes complex financial documents and U.S.  government produced tax forms. For example, State headquarters  officials indicated that, given the documentation burden for both the  applicant and the company, the E-2 nonimmigrant classification may be  less susceptible to fraud than other nonimmigrant classifications.

According to State’s E-2 fraud data, the number of E-2 fraud referrals has  decreased since fiscal year 2015, but the number of confirmed fraud  cases was consistent from fiscal years 2014 through 2018, as shown in  figure 15. There was an initial increase in referrals from fiscal year 2014  to 2015, which State officials attributed to consular staff more consistently  making such requests through the official system of record rather than by  email. From fiscal years 2015 through 2018 the number of E-2 visa  fraud referrals decreased each year, from 664 in fiscal year 2015 to 280  in fiscal year 2018. Throughout this time period, the number of confirmed  fraud cases stayed about the same, ranging from 39 to 59 cases per  year.

Although consular officials at 12 of the 14 posts considered E-2 visas to  be low fraud risk, consular officers also identified country-specific E-2  fraud trends and indicators that they monitored at their post, as  appropriate, such as the type of business, the location of the business, or  the nationality of the applicant.

Some of the posts in our review have taken additional actions to address  E-2 fraud, such as additional fraud reviews and conducting validation  studies:

Additional fraud review: Consular managers at one post told us that  the post has devoted additional resources to ensure that all E-2 visa  applications undergo an additional fraud review, given that E-2 visas  can have a relatively long validity period than most nonimmigrant  visas. At this post, all E-2 visa applications are sent to the fraud  prevention manager and the ARSO-I, both of whom conduct  additional research and look for fraud indicators.

Validation study: Validation studies determine the extent to which  foreign nationals who were issued visas later overstayed or misused  their visa, and can be conducted by post officials for any visa  classification. One post in our review conducted a validation study that  focused on E-2 visas that post had issued to foreign nationals  associated with food service companies (e.g., restaurants) to  determine how many remained in business and how many E-2 visa  holders continued to travel or stay in the United States after the  business failed. According to this 2016 validation study, the post had  concluded that almost one-quarter of food service companies in its  study had failed within about three years, and nearly half of E-2 visa  holders for those companies did not depart after the company had  failed or continued to travel to the United States on their E-2 visa.  According to the post’s fraud team, the study showed that even  prospective E-2 visa enterprises that meet the applicable  requirements at the time of application can become unqualified over  time, and that adjudicators should take long-term viability into account  when determining the marginality of a business. The post’s fraud team  also stated that other posts may wish to consider standardized follow- ups for approved E-2 enterprises and routine confirmations of vetted  E companies as the E-2 visa category continues to grow in  popularity.

section_title: USCIS Has Identified E-2 Fraud as a Priority and Is Analyzing Its Fraud Risk in a Pilot Project
paragraphs: USCIS officials stated they consider E-2 fraud to be a significant issue  and take several steps to identify fraud, including fraud referrals, fraud  assessment technology, and site visits. First, according to USCIS  officials, immigration officers reviewing the E-2 petition look for anomalies  and other indicators of fraud and send a fraud referral for any potential  fraud cases by forwarding the case to the service center’s fraud detection  office. Immigration officers in the fraud detection office then are to  conduct further research, such as reviewing open sources (e.g., company  website) or may request a site visit to the business.

Second, USCIS uses a fraud assessment technology on all petitions to  determine if an E-2 company exists and is financially viable. Specifically,  the Validation Instrument for Business Enterprises (VIBE) is a technology  that helps immigration officers to determine if a business is operating,  financially strong and viable, has good credit, and has not been involved  in past fraud. According to USCIS officials, VIBE reviews existing  business-related information on an enterprise, such as an office supply  store account or utility bills, to determine if it is real and operating.

Finally, immigration officers may request site visits based on their review  of the application or VIBE results. During such site visits, immigration  officers visit the business location to determine if the business is  performing as stated in the petition and in compliance with the E-2 visa  eligibility requirements. The results of the site visit are sent back to the  originating location for adjudication. According to USCIS officials, if a  larger conspiracy is uncovered, such as fraud involving multiple  beneficiaries, the immigration officer may make a referral to U.S.  Immigration and Customs Enforcement for further criminal investigation  and potential prosecution, but added that this is very rare.

USCIS immigration officers made 252 requests for site visits based on  VIBE results from fiscal year 2014 through 2018 for E-2s. Of these site  visits, USCIS determined there was confirmed fraud for 25 percent (63),  as shown in figure 16. Of the 63 confirmed fraud cases, 42 enterprises  were not located at the site provided in the petition and 14 enterprises  had provided fraudulent documents or otherwise mispresented the  facts. For example, in one case, the beneficiary paid a dental laboratory  to assign her in a fictitious position of office manager so that she could  obtain E-2 status, but the beneficiary had never worked there. In another  example, an investor seeking E-2 status in May 2015 submitted a petition  based on a discount store that had gone out of business in January 2013.  According to USCIS officials, when fraud is confirmed, the immigration  officer will deny the petition, review any pending or previously approved  petitions from the petitioner, and fraud finding will be entered into VIBE,  which affects the applicant’s ability to obtain future immigration benefits,  including visa application or petition approvals from the United States  government.

State consular officers can also request that USCIS conduct site visits to  help in its adjudication of E-2 visa applications, but USCIS data indicate  that such requests are rare. According to USCIS, the agency received 10  external site visit requests from State from fiscal years 2014 through  2018. Of the 10 requests, USCIS conducted site visits to seven  businesses and found one incidence of fraud involving a restaurant.

According to State officials, site visits are considered to be resource  intensive for the USCIS and can take several weeks or months to  complete. The officials added that if a consular officer determines that an  applicant is unqualified for the visa, it would not be considered an  effective use of the post’s resources to conduct additional investigations  or request a U.S.-based site visit from USCIS.

Based on the results of the site visits and other factors, USCIS officials  stated that they have prioritized E-2 fraud, and initiated a site visit pilot  program in February 2018 to better determine the extent to which fraud  exists. This pilot program focuses on businesses associated with  individuals approved for an E-2 status extension and certain eligibility  criteria. According to USCIS officials in July 2019, the most commonly  encountered fraud or noncompliance issues thus far have involved  enterprises that were not operational, not engaged in any business  activities, or were not operating as stated in the petition. USCIS plans to  continue the E-2 pilot into fiscal year 2020 and to share the results with  State.

section_title: State and USCIS Efforts to Coordinate E-2 Anti-Fraud Activities Are Limited
paragraphs: State’s and USCIS’s respective roles in the E-2 process, along with a  current lack of coordination on E-2 anti-fraud efforts, may contribute to the  differences in the way the agencies view and prioritize the risks of E-2  fraud. Drawing on the results of its site visit pilot project, USCIS has  said it views E-2 fraud as a significant issue and plans to prioritize efforts  to combat E-2 fraud moving forward. While State has taken some steps to  examine and combat E-2 visa fraud, officials we spoke with at posts and  at headquarters told us that E-2 fraud is rare and generally low risk. The  E-2 validation study that one post conducted, noted earlier, also provided  evidence that E-2 fraud occurred, at least in that business sector from  that particular country. While it is possible that additional validation  studies across different posts and business sectors would uncover fraud  trends, State officials noted that validation studies are resource intensive,  and that E-2 visas represent only a small fraction of the total visas they  adjudicate each year. Therefore, State officials stated that such studies  are likely to be focused on more common visa types, such as tourist and  business visitor visas.

Although some factors may explain why USCIS and State view the risk of  E-2 fraud differently, both agencies encounter foreign nationals seeking  the E-2 status in the United States. Officials from both agencies stated  that USCIS may be more likely to uncover fraud than State because  USCIS processes E-2 status extensions for individuals already in the  United States. E-2 principals (i.e., investors, managers, and essential  employees) would have had up to 2 years to try to run, manage, or work  for their business, with the intention to depart at the conclusion of their  authorized period of stay. If they failed, gave up, or ended employment,  but still sought an E-2 status extension, any materially false  representations made as to their eligibility could be considered fraudulent.  Officials from both agencies suggested that State may be adjudicating  visas for more new businesses, which may qualify at the time of initial  adjudication but could ultimately fail. However, during our observations  and file reviews, we found that USCIS also adjudicates petitions for new  businesses for beneficiaries seeking to change to E-2 status, and State  also adjudicates E-2 visa applications for existing businesses that have  previously been associated with E-2 visa holders. Further, neither State  nor USCIS collect data that track the number of new businesses seeking  E-2 status for their employees. As such, we cannot verify the accuracy of  this reason for explaining why or if USCIS is more likely to encounter  fraud among individuals seeking E-2 status than State.

Both State and USCIS collect information that could potentially be useful  to each other’s activities to identify and address E-2 fraud, but the  agencies do not have a mechanism for regular coordination on fraud. For  example, as previously noted, consular officers adjudicating E-2 visas  overseas learn to identify country-based fraud trends as well as trends  specific to E-2 visas. USCIS immigration officers can identify similar  trends, and the results of USCIS’s site visits may further identify potential  fraud trends that would be useful for State consular officers.

However, interagency coordination is ad hoc, generally among  headquarters officials only, and relatively rare. For example, both State  and USCIS officials stated that the main formal mechanism of  coordination on all E-2 visa issues is a quarterly teleconference.  However, such meetings were cancelled 7 out of 8 times in fiscal years  2017 and 2018 because officials did not identify agenda topics to discuss,  according to State and USCIS officials. Further, such meetings have not  included discussions of E-2 fraud issues. State officials stated that they  share country fraud summaries with USCIS. However, these fraud  summaries do not focus on E-2 visas, but fraud trends more generally.

According to A Framework for Managing Fraud Risks in Federal  Programs, agencies should establish collaborative relationships with  stakeholders to share information on fraud risks and emerging fraud  schemes, as well as lessons learned related to fraud control activities.  Managers can collaborate and communicate through a variety of means,  including task forces, working groups, or communities of practice.  Although State and USCIS have some informal mechanisms in place to  share fraud-related information, such as emails among headquarters  officials and by sharing high-level country fraud reports, formal  information sharing mechanisms have not been regularly operating.  Although the two entities view the risk of E-2 fraud visa differently, both  State’s and USCIS’ E-2 antifraud efforts would benefit from ensuring that  they regularly share information on fraud risks. Doing so will help both  entities to better identify emerging fraud trends, prevent foreign nationals  from fraudulently obtaining E-2 status, and identify areas for potential  collaboration and resource sharing.

section_title: Conclusions
paragraphs: The E-2 nonimmigrant classification helps to facilitate foreign investment  in the United States, which contributes to the U.S. economy each year.  State and USCIS share the responsibility for adjudicating thousands of E- 2 visa applications and petitions annually for foreign nationals seeking E- 2 status. Both State and USCIS officials stated that given the complexity  of adjudicating E-2 applications and petitions, and the level of  documentation and time required, the E-2 adjudication process can  present challenges with respect to the analysis of E-2 eligibility  requirements. State consular officers, managers, and LES noted that  additional training and resources are needed to help them better  understand the eligibility requirements and supporting financial and  business documents. Enhancing E-2 training and providing additional  resources such as documents clarifying E-2 eligibility requirements would  help better ensure that consular officers and LES prescreening and  adjudicating these visas have the necessary knowledge, skills, and abilities to carry out their responsibilities effectively across posts  worldwide.

Additionally, some overseas State posts have developed E-2 company  registration programs to more efficiently process and adjudicate E-2 visa  applications. Although there are benefits to such programs, the variation  in the standards of these programs may result in different processing of  companies and applicants across posts, as well as acceptance of varying  levels of risk by posts. Establishing guidance or minimum standards for  posts that choose to implement such programs would better ensure that  all posts’ E-2 visa adjudication processes are consistent with State’s  policies, objectives, and risk tolerance. Further, State and USCIS require  certain information and documents be retained for all E-2 applications and  petitions; however, during our file review of State and USCIS E-2  adjudications, we identified that some required documents were missing  from State files. Ensuring that posts retain all required E-2 documentation  would better position State to be able access applicant information, which  could be needed for law enforcement, anti-fraud, or security purposes  later. Finally, although State and USCIS collect information that could  potentially be useful to each other’s activities to address E-2 fraud,  coordination between State and USCIS on E-2 fraud has been ad hoc,  generally among headquarters officials only, and relatively rare.  Developing regular coordination mechanisms would help both entities to  better identify emerging fraud trends and prevent foreign nationals from  fraudulently obtaining E-2 status.

section_title: Recommendations for Executive Action
paragraphs: We are making the following five recommendations to State and USCIS:

The Assistant Secretary of State for Consular Affairs should provide  additional training or related resources to consular officers and locally  employed staff on adjudicating E-2 visas, to cover topics that include  the E-2 eligibility requirements and understanding business- and tax- related documents. (Recommendation 1)

The Assistant Secretary of State for Consular Affairs should develop  minimum standards for E-2 company registration programs, such as  standards for how often companies are to be re-vetted.  (Recommendation 2)

The Assistant Secretary of State for Consular Affairs should develop  and implement a process to ensure that posts maintain required E-2  visa application documentation. (Recommendation 3)

The Secretary of State, in coordination with the Director of USCIS,  should establish regular coordination mechanisms to share  information on E-2 fraud risks. (Recommendation 4)

The Director of USCIS, in coordination with the Secretary of State,  should establish regular coordination mechanisms to share  information on E-2 fraud risks. (Recommendation 5)

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to State and DHS for their review and  comment. State and DHS provided written comments, which are  reproduced in appendices IV and V, respectively. Both State and DHS  concurred with our recommendations. State and DHS also provided  technical comments, which we incorporated as appropriate.

State concurred with all four recommendations addressed to it in the  report (recommendations 1, 2, 3, and 4), and described actions it plans to  take in response. To address recommendation 1, State plans to increase  the frequency and specificity of E-2 content through webinars, workshops,  and guidance, and by developing subject matter experts domestically who  can provide consultative services on an as-needed basis for business and  tax-related documents. To address recommendation 2, State plans to  require a minimum 5-year mandatory review of companies registered at  any post using a company registration program. To address  recommendation 3, State plans to reinforce its E-2 visa documentation  retention policy in regular policy guidance to consular managers. To  address recommendation 4, State plans to hold regular, high-level  coordination meetings with USCIS to include coordination on E visa  adjudication standards. DHS concurred with recommendation 5, and  stated that the department plans to share the results of its site visits  during quarterly coordination meetings with State. These actions, if  effectively implemented, should address the intent of our  recommendations.

We are sending copies of the report to the Acting Secretary of Homeland  Security, Secretary of State, and appropriate congressional committees.  In addition, the report will be available at no charge on GAO’s website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  Rebecca Gambler at (202) 512-8777 or gamblerr@gao.gov or Jason Bair  at (202) 512-6881 or bairj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix VI.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report reviews the Department of State’s (State) and Homeland  Security’s (DHS) U.S. Citizenship and Immigration Services’ (USCIS)  oversight and implementation of E-2 adjudications. Specifically, this report  examines (1) the outcomes and characteristics of foreign nationals who  have sought or received E-2 status during fiscal years 2014 through  2018, (2) State’s and USCIS’s policies and procedures to ensure that  individuals meet E-2 eligibility requirements, and (3) State’s and USCIS’s  efforts to assess and address potential fraud in the E-2 adjudication  process.

To determine the outcomes and characteristics of foreign nationals who  have sought or received E-2 status, we analyzed data from State’s  Bureau of Consular Affairs and USCIS on E-2 visa applications and  petitions adjudicated from fiscal years 2014 through 2018. For example,  the data we analyzed included E-2 role (e.g., investor, manager, essential  employee, and dependents), adjudication outcome (i.e., issued or  refused), and nationality, among other data points. To assess the  reliability of the E-2 data, we interviewed State and USCIS officials that  maintain the data and checked the data for missing information, outliers,  and obvious errors, among other actions. For example, we identified and  removed duplicate entries in State’s data. On the basis of these steps,  we determined that the data were sufficiently reliable for the purposes of  our reporting objectives, including providing summary statistics on E-2  adjudications, outcomes, and the characteristics of those seeking E-2  status.

To obtain additional data points, such as types of business and  investment amount, we analyzed generalizable stratified random samples  of E-2 visa applications and petitions adjudicated in fiscal year 2018.  Specifically, we reviewed 124 E-2 petitions from USCIS and 120 State  applications for E-2 investors, managers, and essential employees. The  documents in our file review included, for example, State’s DS-160 online  nonimmigrant visa application and DS-156E supplemental application,  USCIS’s I-129 petition for nonimmigrant workers, and supporting  documents, when available. To collect information from the applications  and petitions, we created a data collection instrument and established  standard procedures to ensure that we accurately collected the  information from the original forms. We chose sample sizes to achieve  precision levels for a percentage estimate of plus or minus 10 percentage  points for important sub-populations, such as denied petitions and role  (e.g., investor, manager, and essential employee). As a result, all  percentage estimates presented in this report have a precision of plus or  minus 10 percentage points or fewer, unless otherwise noted. Further, we  classified the types of businesses in the applications and petitions using  the North American Industry Classification System by conducting a  content analysis of the business description field in the applications and  petitions to group related business types into larger groups, such a food  service and manufacturing.

Further, we also collected and analyzed data and information from USCIS  and U.S. Customs and Border Protection on post E-2 adjudication  outcomes, including changing status from E-2 to another nonimmigrant  category, adjusting from E-2 status to lawful permanent residency, and E- 2 nonimmigrants who remain in the United States beyond the expiration  of their authorized period of stay, known as overstays.  We present the  results of this analysis in Appendix III. To assess the reliability of these  data, we interviewed officials that maintain the data and checked the data  for missing information, outliers, and obvious errors, among other actions.  On the basis of these steps, we determined that the data were sufficiently  reliable for the purpose of providing summary statistics on E-2 post  adjudication outcomes.

To assess State and USCIS policies and procedures to ensure that  individuals meet E-2 eligibility requirements, we reviewed relevant State  and USCIS guidance documentation, including State’s Foreign Affairs  Manual and USCIS’s E-2 standard operating procedures. We also  reviewed relevant provisions of the Immigration and Nationality Act and  implementing regulations, which set forth the E-2 eligibility requirements.  We interviewed officials from State’s Bureau of Consular Affairs and  Foreign Service Institute, and USCIS on their respective agencies’ E-2  processes and procedures, as well as training provided to State’s  consular officers and USCIS’s immigration officers. Further, we assessed  State’s and USCIS’s policies and procedures to ensure that individuals  meet E-2 eligibility requirements against control environment, control  activities, and monitoring internal control standards in Standards for  Internal Control in the Federal Government, as well as documentation  retention requirements in agency guidance.

We conducted site visits to State and USCIS locations that adjudicate E-2  visas and petitions, respectively. For State, we conducted site visits to  four posts abroad—London, United Kingdom; Seoul, South Korea; Tokyo,  Japan; and Toronto, Canada from October through December 2018. For  our site visits, we selected posts that (1) were among the 10 highest E-2  adjudicating posts by volume in fiscal year 2017, (2) had different staffing  models for processing E-2 visa adjudications, such as posts that had a  single officer specializing in E-2 visas or posts that had all consular  officers adjudicate E-2 visas, and (3) were geographically dispersed.  During these visits, we observed the prescreening and adjudication of E-2  applications and used a data collection instrument to collect information  on the cases we observed, such as adjudication outcome and other non- personally identifiable information about the case. We interviewed  consular officers and managers, locally employed staff (LES), fraud  prevention managers, and the assistant regional security officer- investigators (ARSO-I), where available, about topics such as E-2 visa  adjudication policies, procedures, resources and training available at  post. Our observations from these site visits provided useful insights into  State’s E-2 adjudication procedures, but are not generalizable to all posts  that adjudicate E-2 visas. For USCIS, in November 2018, we visited the  California Service Center in Laguna Niguel, California—which is the only  USCIS service center that adjudicates E-2 petitions—to observe E-2  petition adjudications and interview USCIS officials.

In addition to our site visits, we conducted telephonic interviews with  consular officers and LES who are responsible for prescreening and  adjudicating E-2 visa applications at the remaining six of the top 10 posts  in terms of E-2 annual adjudications, as well as four randomly selected  low-volume posts. The 4 low-volume posts were selected at random  from a list of posts that had adjudicated at least 100 E-2 visa applications  in fiscal year 2017. We collected copies of post-specific standard  operating procedures and local E-2 visa adjudication tools (e.g.,  checklists), as available, from the 14 posts we visited or interviewed.  Further, we reviewed written responses from the consular managers  responsible for supervising E-2 visa adjudications at these 14 posts to a  set of questions regarding E-2 adjudication processes and procedures,  challenges, E-2 company registration programs, and E-2 training.

To determine the efforts that State and USCIS take to assess and  address E-2 fraud, we reviewed relevant State and USCIS standard  operating procedures and guidance. We interviewed headquarters  officials from State and USCIS, such as State’s Office of Fraud  Prevention Program and USCIS’s Fraud Detection and National Security  Directorate, on how both agencies identify and address potential E-2  fraud and what, if any, coordination or information sharing occur between  State and USCIS. During our 4 site visits abroad, we interviewed officials,  such as fraud prevention managers and ARSO-Is, on anti-fraud efforts for  E-2 visas at their posts, including potential fraud trends. Similarly, we  interviewed immigration officers at USCIS’s California Service Center on  their anti-fraud efforts for E-2 petitions. We obtained data from State and  USCIS on fraud referrals—that is, cases sent to fraud experts for  additional research and review—and the results of fraud site visits from  fiscal year 2014 through 2018. To assess the reliability of these data, we  interviewed State and USCIS officials that maintain the data and checked  the data for missing information, outliers, and obvious errors, among  other actions. On the basis of these steps, we determined that the data  were sufficiently reliable for the purposes of our reporting objectives,  including providing summary statistics on fraud referrals and the results of  fraud site visits. Further, we assessed State’s and USCIS’s anti-fraud  efforts against best practices found in A Framework for Managing Fraud  Risks in Federal Programs.

We conducted this performance audit from July 2018 to July 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: List of Treaty Countries Eligible for E-2 Status
paragraphs: The Immigration and Nationality Act requires the existence of a qualifying  treaty of commerce and navigation between the United States and a  foreign state in order for E-2 visa classification to be accorded to  nationals of that foreign state. According to Department of State  guidance, such qualifying treaties may include treaties of friendship,  commerce and navigation, and bilateral investment treaties. As of June  2019, nationals of the 82 countries listed in Table 7 may be accorded E-2  status pursuant to a qualifying treaty, or pursuant to legislation enacted to  extend that same privilege.

section_title: Appendix III: E-2 Adjudication Statistics
paragraphs: This appendix presents various statistics on adjudications by State for E-2  visas as well as those by U.S. Citizenship and Immigration Services  (USCIS) for E-2 petitions for fiscal years 2014 through 2018. We present  these data broken out by fiscal year, outcome (e.g., issued or refused),  type (e.g., investor, manager, essential employee, dependent), country of  nationality or birth, reason for refusal, and prior nonimmigrant status, if  available. Further, we also provide statistics on some post-adjudication  outcomes—that is, data on characteristics of those who obtained E-2  status. These outcomes include changes to another nonimmigrant status  or lawful permanent residency, or the extent to which E-2 status holders  remained in the United States beyond their authorized period of stay,  known as overstaying.
subsections: section_title: State
paragraphs: For the purposes of this appendix, there are four potential roles for foreign  nationals seeking E-2 status. First, a foreign national who has committed  funds to a U.S. enterprise and is in a position to develop and direct the  operations of the enterprise in which he or she has invested substantial  capital is known as an investor. Second, a foreign national employee in  an executive or supervisory position is known as a manager. Third, a  foreign national employee, in a lesser capacity than a manager, but  having special qualifications essential to successful or efficient business  operations, is known as an essential employee. Finally, the spouse or  qualifying child of an investor, manager, or essential employee is known  as a dependent. State consular officers will adjudicate the visa application  as either issued or refused.

A foreign national seeking E-2 status as an investor, manager, or  essential employee is known as a principal, and a spouse or qualifying  child of a principal is known as a dependent. Foreign nationals seeking E- 2 status through USCIS use different forms based on whether they are a  principal or a dependent. USCIS immigration officers will generally  adjudicate the petition as either approved or denied.

section_title: Post Adjudication Outcomes for E-2 Status Holders
paragraphs: Change of Status From E-2 to Another Nonimmigrant Category. From  fiscal years 2014 through 2018, about 5,000 foreign nationals sought to  change from E-2 status to another nonimmigrant status. As shown in  figure 17 and table 16, most of these requests were to change to  academic student status (F-1, 31 percent), temporary workers in specialty  occupation status (H-1B, 10 percent), tourist status (B-2, 9 percent), and  intracompany transferee executive or manager status (L-1A, 7 percent),  as well as dependents of these statuses. Further, about 11 percent of  these foreign nationals were requesting to change from one role within E- 2 status to another. As previously noted, this could include, for example, a  spouse of an E-2 investor later seeking to work at the company as a  manager.

Adjusting from E-2 Status to Lawful Permanent Resident. From fiscal  years 2014 through 2018, over 22,000 foreign nationals changed from E- 2 status to lawful permanent residents. The large majority of these (73.1  percent) were employment-based (i.e., sponsored by a U.S. employer),  as shown in figure 18 and table 17.

Overstays. According to DHS data, a relatively low percentage of foreign  nationals with E-2 status—obtained either through an E-2 visa from State  or an approval to change to, or extend, their E-2 status from USCIS— overstayed their authorized period of admission compared to other  nonimmigrant statuses. From fiscal years 2016 through 2018, DHS  reported that the total overstay rate decreased slightly from 1.5 percent to  1.2 percent.  Similarly, the overstay rate for E-2 status for the same  years decreased from 0.8 percent from 0.6 percent, as shown in table 18.

As we previously reported, U.S. Customs and Border Protection (CBP)  implemented system changes in 2015 that allowed CBP to identify E-2  overstays, along with other nonimmigrant categories beginning in fiscal  year 2016.

DHS officials stated that the process to track E-2 visa overstays is the  same as with other visa categories. They noted that specific visa  categories are not prioritized; CBP and U.S. Immigration and Customs  Enforcement focus on those overstays where the individual is identified  as a national security or public safety risk.

section_title: Appendix IV: Comments from the Department of Homeland Security

section_title: Appendix V: Comments from the Department of State

section_title: Appendix VI: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts

section_title: Staff Acknowledgments
paragraphs: In addition to the individuals named above, Adam Hoffman (Assistant  Director), Kim Frankena (Assistant Director), Erin O’Brien (Analyst-in- Charge), Juan Pablo Avila-Tournut, Kristen E. Farole, James Ashley,  Caitlin Cusati, Eric Hauswirth, Amanda Miller, Sasan J. “Jon” Najmi,  Adam Vogt, and K. Nicole Willems made significant contributions to this  report.

Fast facts: Foreign nationals from 82 treaty countries may obtain E-2 nonimmigrant investor status in the United States. E-2 status allows eligible foreign nationals to temporarily stay here to run a business if they make a “substantial” investment in it and meet other qualifications. Their employees and family members may also obtain E-2 status.

The State Department and U.S. Citizenship and Immigration Services told us determining E-2 eligibility, which may require extensive documentation, can be difficult. For example, reviewers must judge whether the investment is substantial.

Among other things, we recommended improved training on assessing eligibility.

Question-summary annotations: questions: question: What was the extent and results of the Department of State and USCIS’ processing of foreign nationals seeking E-2 status from 2014-2018?
answer: The Department of State (State) and U.S. Citizenship and Immigration Services (USCIS) annually adjudicated about 54,000 visa applications or petitions from fiscal years 2014 through 2018 for foreign nationals seeking E-2 nonimmigrant status, over 80 percent of which were approved.

question: What was the distribution of State versus USCIS applications?
answer: About eighty percent of E-2 adjudications were for State visa applications, and the remaining 20 percent were for USCIS petitions to extend or change to E-2 status.

question: What types of people are seeking E-2 statuses through State and USCIS?
answer: Generally, about half of the foreign nationals seeking E-2 status were investors, managers, or essential employees of an E-2 business, and the other half were their spouses or children.

questions: question: Why may a foreign national be reluctant to apply for E-2 status over a standard visa?
answer: Consular officers noted that E-2 visa adjudications are complicated and resource-intensive, often requiring more documentation and time to complete than other visas.
child_questions: question: What is the scope of the difficulty of applying for an E-2 visa?
answer: Consular officers noted that E-2 visa adjudications are complicated and resource-intensive, often requiring more documentation and time to complete than other visas. For example, the requirement that the investment in the business be substantial does not prescribe a minimum capital amount. Rather, the investment must be large enough to support the likely success of the business, among other criteria.

question: How are E-2 visas impacted by the projection of their businesses’ substantiality?
answer: Consular officers at 10 of 14 posts GAO interviewed indicated that determining the investment's substantiality is difficult for newly encountered business types.

question: What is a way in which the State department may help make the E-2 visa process better in the future?
answer: Providing additional E-2 training or related resources would help ensure that consular officers and locally employed staff have the necessary knowledge and abilities to carry out their responsibilities.

questions: question: How do State and USCIS address E-2 fraud?
answer: State and USCIS have resources to address E-2 fraud, which includes submitting falsified documents or making false statements material to the adjudication; however, coordination on E-2 anti-fraud efforts is limited.

question: How do State and USCIS differ in the ways they address E-2 fraud?
answer: State has anti-fraud efforts in place for all nonimmigrant visa types, but State officials stated that they consider E-2 visa fraud to be lower risk compared to other visas because the large amount of complex paperwork required for the E-2 visa discourages malicious actors. USCIS officials consider E-2 fraud to be a significant issue and have taken steps to identify fraud, such as using fraud assessment technology to determine if a business is financially viable and conducting site visits if fraud is suspected.
child_questions: question: What do State and USCIS have in common when it comes to addressing E-2 fraud?
answer: Both State and USCIS collect information that could be useful to each other's anti-fraud efforts, but interagency coordination on E-2 fraud issues is ad hoc and relatively rare. For example, the main formal mechanism of coordination on E-2 visa issues—a quarterly teleconference—was cancelled 7 out of 8 times in fiscal years 2017 and 2018.

question: What is the most effective way for E-2 fraud to be addressed?
answer: Coordinating regularly on fraud issues, which is a best practice from GAO's Fraud Risk Framework, will help both entities to better identify emerging E-2 fraud trends and areas for potential resource sharing.

questions: question: What is an option for people from other countries to enter the United States without applying for citizenship?
answer: Foreign nationals from 82 countries may obtain E-2 nonimmigrant investor status in the United States.

question: What is the E-2 nonimmigrant classification?
answer: The E-2 nonimmigrant classification allows an eligible foreign national to be temporarily admitted to the United States to direct the operations of a business in which they have invested a substantial amount of capital, or to work in an approved position (e.g., manager or essential employee).

question: How would a foreign national obtain E-2 status in the United States?
answer: To obtain E-2 status, a foreign national can apply through State for an E-2 visa abroad, or if already in the United States, by petitioning USCIS to extend or change to E-2 status.

questions: question: What is the role of GAO In State and USCIS's E-2 processes?
answer: GAO was asked to review State's and USCIS' E-2 adjudication process.
child_questions: question: What does GAO's report overview?
answer: This report addresses: (1) outcomes and characteristics of foreign nationals who sought or received E-2 status from fiscal years 2014 through 2018, (2) policies and procedures for ensuring that individuals meet E-2 eligibility requirements, and (3) efforts to assess and address potential E-2 fraud.

question: How did GAO go about analyzing State and USCIS's processes?
answer: GAO analyzed State and USCIS data on E-2 adjudications, generalizable samples of E-2 visa applications and petitions, and relevant documents.

question: How did GAO further their analysis?
answer: GAO interviewed officials at 14 State posts abroad, selected based on E-2 application volume and other factors, and observed E-2 adjudications at four of these posts and USCIS's California Service Center.