Few tasks are as difficult as handling a newborn child and making a world spanning airline flight to see family and friends. That extra set of hands will make everyone happier.

Traveling to the US with a domestic worker or caregiver is allowed if the sponsor (employer)1 obtains a B-1 visa by satisfying all the criteria2, and upon arrival in the US completes the employment authorization processes including tax registrations, banking details for wages, and honors the employment contract. It seems simple enough – but – DIY applicants fail at a high rate – when unprepared. The technical requirements can be addressed in most instances.

However, the suspicion of human trafficking which attaches to this visa classification is considerable – and will result in a rejection even when all other criteria appear satisfied. Such a fear can also result in a criminal referral to local law enforcement. The suspicion will remain even when the visa is issued since airline personnel and border control authorities are all trained and sensitized to indicia of human trafficking. Prepare and plan understanding that new reality.

Summary – B Visa Will Allow A Domestic Worker to Accompany The Sponsor (Employer) To The US

Entry to the US, and working while inside the US, is authorized for certain domestic workers, personal assistants, or caregivers (“domestic workers”) accompanying or following to join U.S. citizens who have a permanent home or are stationed in a foreign country, or non-immigrant US visa holders in individuals in a B, E, F, H, I, J, L, or TN non-immigrant classifications. The rules are not DIY friendly, and there are several legal obligations that follow the sponsor and the domestic worker once inside the US. Failure to satisfy all the requirements can lead to an immigration ban, liability for civil and criminal laws relating to taxation, labor regulations, and social security participation obligations.

US Citizens Working Overseas – Domestic Workers/Caregivers 3 – How To Qualify For B Visa

The applicant domestic worker typically works for an employer who is frequently assigned overseas for two or more years and is coming to the US for a “temporary” purpose. If the employer (and domestic worker) qualifies then the B-1 visa status of the domestic worker engaged in such work authorizes such “employment” or “labor for hire” within the United States.4 The duration of the B-1 stay in the US is not more than 6 months consecutive; maximum total amount of time permitted in B-1 status on any one trip is generally one (1) year if a timely extension is granted (in advance). Typically, the domestic worker must leave the US every six (6) months to avoid a visa overstay and subsequent revocation. Review the following:

•       Domestic Worker Qualifications –

• The B-1 domestic worker must have a permanent home in the country of origin and substantial evidence of no intent to abandon that home.
• The B-1 domestic worker must have one (1) year of experience; be at least 16 years old, and may not be a family member of the employer.
• Domestic worker visa applicants (like most non-immigrant visa applicants) must prove to the satisfaction of the Consular Official that the domestic employee (applicant) has a residence abroad which she has no intention of abandoning.
• Upon arrival to the United States the B1 domestic worker must immediately apply for work authorization from the USCIS and obtain an EAD card. Upon receipt of the EAD, domestic worker must also make application for a Social Security Number for reporting of payroll and income taxes on US earnings.

•       Sponsor (Employer) Qualifications –

• The employer-employee relationship must have existed for at least 6 months5 (US citizen and LPR holders are not eligible to bring in domestic workers on B-1 Visa),6 or the employer must have regularly employed a domestic employee in the same capacity abroad.7
• Accompanying the domestic worker’s visa application must be a letter from the sponsor’s (employer’s) company attesting that the employer (sponsor) is subject to frequent international transfers lasting two years or more as a condition of employment AND that the current assignment in the United States will last for no more than four years.
• B-1 visa rules and regulations require the sponsor (employer) to assert in a sworn statement that the worker will be paid a “fair wage” for full time work. The “fair wage”8 for a B1 domestic worker visa must be not less than the minimum of the greater of the state’s minimum wage or the federal minimum wage.9
• An employment contract or an oral employment agreement or other contract in English, translated to the worker’s native language which has been signed by both parties, and compliant with the Department of State criteria is required.10
• Working conditions, hours, compensation relating to same, must be consistent with State laws where resident. No work is allowed under the visa outside of these legal restraints.
• Employment taxes must be paid by the sponsor (employer) as if the domestic worker were Employment Authorized.
• The sponsor (employer) must pay the B-1 domestic worker on either a weekly or bi-weekly basis and payment must be by bank check or a direct deposit of net payroll into a bank account owned solely by the B-1 domestic. US bank accounts are available for visitors is available in most commercial banks using a passport and visa.
• The sponsor (employer) must, if the domestic worker lives in the residence, provide adequate and reasonable accommodations. This will include at a minimum a private bed, access to a bathroom, kitchen facilities, and proper food storage.11
• The sponsor (employer) may not retain physical possession of the passport of the domestic worker.
• The sponsor must pay the transportation expenses of the sponsored domestic worker from their home country to the United States. At the end of the contract or when the contract is terminated with at least two weeks prior notice, the sponsoring alien must departs the US and the sponsor must provide the transportation from the United States sufficient return the B-1 domestic worker to the country of origin. The application must show proof of payment for transportation and an outbound departure on the visa rotation dates.12
• The sponsor (employer) will be the only provider of employment to the domestic worker.

Domestic Workers/Caregivers 13 – How To Qualify For B Visa

A non-immigrant may bring to the US a personal employee or domestic worker who accompanies or follows to join an employer who is seeking admission into, or is already in, the United States in B, E, F, H, I, J, L, M, O, P, Q, and TN (NAFTA Professional) nonimmigrant status.14 The following requirements must be satisfied at the visa interview (if not beforehand). Please review the below:

Domestic Worker Qualifications

• The employee has a residence abroad which they have no intention of abandoning (notwithstanding the fact that the employer may be in a nonimmigrant status which does not require such a showing)
• The employee can demonstrate at least one year’s experience as a personal employee or domestic worker;
• The employee has been employed abroad by the employer as a personal employee or domestic worker for at least one year before the date of the employer’s admission to the United States or if the employee-employer relationship existed immediately before the time of visa application, the employer can demonstrate that they have regularly employed (either year-round or seasonally) personal employees or domestic worker’s over several years preceding the domestic employee’s visa application for a non- immigrant B-1 visa;

Sponsor (Employer) Qualifications

• The Sponsor and the applicant must have an employment contract in a language understood by the employee that has been signed and dated by the employer and employee, and such contract includes the following provisions:
• The employee will receive the greater of the minimum or prevailing wage under U.S. federal, state, or local law for an eight-hour workday;
• The employee will receive free room and board;
• The employer will be the only provider of employment to the employee; and
• The employer must pay the domestic’s initial travel expenses to the United States, and to the employer’s onward assignment, or to the employee’s country of normal residence at the termination of the assignment.

The most common scenario for the non-immigrant who brings a domestic worker to the US on a short stay (tourist) is the desire to introduce a newborn child to relatives or to have assistance with an injured or sick traveler. The rules do not anticipate this scenario specifically. The Sponsor in this scenario must make a new plan. One approach that fits most situations is to document the domestic worker as a replacement for another –

The rule provides – ***”if the employee-employer relationship existed immediately before the time of visa application, the employer can demonstrate that they have regularly employed (either year-round or seasonally) personal employees or domestic worker’s over several years preceding the domestic employee’s visa application for a nonimmigrant B-1 visa;”*** This means if the Sponsor can show a “string” of domestic workers, then this new hire can “step into the shoes” of the prior workers for the length of service criteria.

The Sponsor has to document that a “domestic” worker of some sort for one or more years worked for the Sponsor. This documentation includes the names, identifications, dates of employment, contracts of employment, and proof of payment for that worker should be made available for examination by the officer. The Sponsor must represent that the current domestic worker is one in a string of such workers in order to be successful in obtaining the B-1 visa for the trip. Do not forget to also show that the replacement domestic worker has at least a total of 12 months of experience as a domestic worker (even if not all of that time is with the Sponsor).

How the Application Fails – Fear of Human Trafficking

Technical compliance with the criteria is not enough to gain a B-1 visa for the domestic worker. Beware the Trafficking Victims Protection Act (TVPA)15 – The law provides that domestic workers traveling on a B-1 visa are viewed with suspicion and concern that the B-1 being presented as a domestic worker is in fact a person being “trafficked.” Under US federal law, the term “trafficking in persons” can be broken into 2 categories: sex trafficking and labor trafficking. Every consular officer that a visa applicant encounters has received multiple trainings on human trafficking and recognition of the “signs.”

The term trafficking is a form of ‘involuntary servitude’ which includes a condition of servitude induced by means of (A) any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in such condition, that person or another person would suffer serious harm or physical restraints; or (B) the abuse or threatened abuse of the legal process.16

There are significant “markers” used by the visa examiner (as well as the officers at the Port of Entry) to subjectively evaluate whether the domestic worker is in fact a person being trafficked. The U.S. Customs and Border Protection (CBP)17 trains its officers and agents to look for signs of human trafficking. Some indicators that may indicate human trafficking include:

• Lack of control- The person may lack control of their communication devices, money, identification or travel documents, or they may be unable to leave their home or work environment.
• Fear or anxiety- The person may appear fearful or submissive, or they may be distrustful of authorities.
• Signs of abuse – The person may have injuries that appear to be the result of assault, or they may show signs of branding or tattooing.
• Lack of basic needs – The person may appear to be deprived of basic needs like proper clothing, food, water, sleep, or medical care.
• Lack of knowledge – The person may be unfamiliar with the local language or may not know their home or work address, or may speak of a “job” which they cannot describe in any detail.
• Controlled movements – The person may seem to have their movements controlled, or they may act as if they were instructed by someone else.

CBP also has a program called the Blue Lightning Initiative (BLI) that trains airline employees to recognize signs of human trafficking and report suspected cases to law enforcement.18 The SOAR to Health and Wellness Training Program is designed to help officers, professionals, and ordinary people identify and respond to those who are at risk of, are currently experiencing, or have experienced trafficking.19 Almost every department of the US government has some level of involvement in the fight against human trafficking.

This atmosphere is one in which the attempt to bring a domestic worker to the US is viewed with a very high level of initial suspicion by the visa examiner. There is a general opinion that if it doesn’t “look normal” the examiner is going to deny the visa. What constitutes as “normal” is solely up to the examiner in the country as the consulate making the judgment decision. A sponsor may not know or understand that the examiner is also a mandatory reporter of suspected human trafficking – and will report suspicions to the chain of command – which reports are always referred to law enforcement from the consular leadership.

NOTE: Victims of human trafficking are eligible for protected status under the specialized “T” visa if the victim announces to any officer of the United States that the person is a victim.20 The victim must reach the US in order to claim protection of this status.

CONCLUSION – Traveling to the US with a domestic worker or caregiver is allowed if the sponsor (employer) obtains a B-1 visa by satisfying all the criteria21, and upon arrival in the US completes the employment authorization processes including tax registrations, banking details for wages, and honors the employment contract. It seems simple enough – but – DIY applicants fail at a high rate – when unprepared. The technical requirements can be addressed in most instances. However, the suspicion of human trafficking which attaches to this visa classification is considerable – and will result in a rejection even when all other criteria appear satisfied. Such a fear can also result in a criminal referral to local law enforcement. The suspicion will remain even when the visa is issued since airline personnel and border control authorities are all trained and sensitized to indicia of human trafficking. Prepare and plan understanding that new reality.

References

¹ A U.S. citizen who has a permanent home or is stationed in a foreign country, but is visiting or is assigned to the United States temporarily; or a foreign citizen who is in the United States on one of the following non-immigrant visa categories: B, E, F, H, I, J, L, M, O, P, or Q.²https://fam.state.gov/fam/09fam/09fam040202.html

³ US Department of State’s Foreign Affairs Manual (9 FAM §41.21, Note 6.2)

⁴ The mandatory employment contract must stipulate to all of the provisions concerning wages, deductions, and employment conditions spelled out in 9 FAM §41.21, Note 6.2. Consular officers should ensure that the terms of the contract are clear and that they conform to the requirements of 9 FAM §41.21 N6.2 and §41.22 N4.4, including in particular payment for time the employee is required to remain on premises after hours, employee’s retention of passport, and employee’s right to leave the premises when not on duty.

⁵ 9 FAM 402.2-5(D)(1) (a) Personal employees or domestic workers may accompany or follow to join a U.S. citizen employer who is traveling to the United States temporarily, if the U.S. citizen employer has a permanent home or is stationed in a foreign country, and the following requirements are met: *** (2) The applicant has been employed abroad by the employer as a personal employee or domestic worker for at least six months before the date of the employer’s admission to the United States; or the employer can show that while abroad the employer has regularly employed a domestic worker in the same capacity as that intended for the applicant*** (see also, 9 FAM 402.2-5(D)(2) for US citizens on temporary assignments inside USA) (see also., 9 FAM 402.2-5(D)(3) for non-immigrant visa holders in visa classes B, E, F, H, I, J, L, M, O, P, Q, and TN.

⁶ Lawful Permanent Residents (LPR) and US citizens who reside inside the US are not eligible to bring an B-1 domestic worker to the US.

⁷ NOTE: Non-immigrant employers need to submit with the application evidence of their own working visa and; proof that the domestic worker was employed by them abroad for at least 1 year before coming to the United States, OR that he/she had at least 1 year’s prior experience abroad in this capacity and that the current employer in the U.S. previously employed a domestic worker abroad.

⁸ https://flag.dol.gov/wage-data/wage-search provides “prevailing wage” where the nature of the domestic service is in a special classification (i.e., medical service provider such as a nurse).

⁹ 9 FAM 41.22 N4.4b(3)

¹⁰ 9 FAM 402.2-5(D)(1)(U) – (4) (U) The employee is in possession of an original contract or a copy of the contract, to be presented at the POE. The employment contract must be in a language understood by the employee and signed and dated by the employer and the employee. https://fam.state.gov/fam/09fam/09fam040202.html The employment contract must include the following provisions:

• (U) The employer will be the only provider of employment to the domestic employee;
• (U) The employer will provide the employee free room and board and a round trip airfare;
• (U) The employee will receive the greater of the minimum or prevailing wage under U.S. federal, state, or local law for an eight-hour workday;
• (U) The employer will give at least two weeks’ notice of their intent to terminate the employment, and the employee need not give more than two weeks’ notice of their intent to leave the employment; and
• (U) The employment contract must also reflect any other benefits normally required for

U.S. domestic workers in the area of employment.

¹¹ This requirement is analogous to 3 FAM 4128.2-1 requirements imposed upon Department of State employees.

¹² Most often the DIY applicants fail to recognize that the B-1 Domestic Worker must depart the US after 6 months unless a timely extension is obtained. The return transportation must be scheduled and purchased for the 6 month return date rather than a longer date which may align to the sponsor’s travel plans.

¹³ US Department of State’s Foreign Affairs Manual 9 FAM §402.2-5(D)(3)

¹⁴ 9 FAM 402.2-5(D)(4) Lawful Permanent Residents (LPRs), including conditional permanent residents and LPRs who have filed Form N-470, Application to Preserve Residence for Naturalization Purposes, may not employ foreign nationals in B-1 domestic status, as the employer is permanently resident in the United States.

¹⁵ https://www.uscis.gov/humanitarian/victims-of-human-trafficking-and-other-crimes/victims- of-human-trafficking-t-nonimmigrant-status/questions-and-answers-victims-of-human- trafficking-t-nonimmigrant-status

¹⁶ If you suspect human trafficking then call the hotline – You can contact the National Human Trafficking Hotline by phone at 1-888-373-7888, text at 233733, or live online chat from anywhere in the U.S. and U.S. territories, 24 hours a day, 7 days a week

¹⁷ https://www.cbp.gov/newsroom/spotlights/protecting-innocent

¹⁸ https://www.cbp.gov/border-security/human-trafficking/blue-lightning

¹⁹ https://nhttac.acf.hhs.gov/soar

²⁰ Human trafficking, also known as trafficking in persons, is a crime in which traffickers use force, fraud, or coercion to compel forced labor or a commercial sex act, or when a victim induced to perform commercial sex is under age 18. The T visa allows victims to remain in the United States to heal, stabilize, and assist law enforcement agencies in

the detection, investigation, and prosecution of human trafficking cases.

²¹ https://fam.state.gov/fam/09fam/09fam040202.html

EU, UK, and USA Tighten Regulatory Standards Across the Textiles Markets Effective in 2025 and Beyond – Are You Ready?

South Africa must have 2025 AGOA reauthorization without penalties and must expand the US market segments available to textile & fashion exporters in order to prosper. US markets are the alternative to the significant expense of the 2025 European Union regulatory structures. South African businesses must open branches inside the US in order to secure market presence before AGOA terminates in September 2025.

2025 is set to become the annus horribilis¹ for the fashion industry in particular and the textile industry more generally. In the past decade, numerous policies and regulations have emerged to promote sustainable fashion, addressing both environmental and social issues across textile, clothing, footwear, and leather value chains. The US is the consumption leader globally.² Already, since 2022 the US has required importers to demonstrate to the customs officials that garments presented for import are “unconnected” to forced labor in Xinjiang Province, China.³ The EU has similar laws and more coming into effect in March 2025. These layers of laws only grow more numerous and complex annually – reaching into all aspects of the fashion industry and textile supply chain. The coalescing of nations around layered restrictions on international trade “adversaries” (competitors) is the “real politic” justification driving

¹ Queen Elizabeth II used the phrase in a speech in 1992 to describe that year, which was marked by several horrific events for the United Kingdom and the crown.

² The US garment market is the largest in the world, with a global share of 23% of total consumption. The US apparel market’s revenue in 2024 was estimated at $358.70 billion, while the global apparel market was valued at $1.79 trillion. https://www.statista.com/topics/5091/apparel-market- worldwide/#:~:text=The%20United%20States%20and%20China,move%20production%20clos er%20to%20home.

³ Uyghur Forced Labor Prevention Act requires that the U.S. Customs and Border Protection Agency (CBP) force textile importers to (1) show by clear and convincing evidence, (2) through diagrams and other physical evidence, (3) that their supply chains from the raw materials to the finished goods presented at the border for importation to the US are (4) free from Uyghur forced labor, and (5) free from the Xinjiang Province even if the supply chain or the goods are not otherwise apparently related to China in any manner. This law effects all products – textiles, fruits, vegetables, other manufactured or value added goods.

these multi-national laws in favor of nation specific trade impairment policies. The shift of the legislative “justifications” from social justice motivations (protecting human rights through trade policies) to the current focus on the environmental harm of the textile & fashion industry practices – is altruistic on the part of some in the coalition and nativist, nationalist, and protectionist in other coalition nations. What business needs to prepare for is the unintended chaos in the supply chain as a result of these laws, and business must have a reasonable approach to staying ahead of these laws through leadership education (i.e., consultants and seminars hosted by trade associations) and advanced planning for solutions.

The Challenge For Industry In 2025 –

The national and sub-national laws which are closing-in on the textile & fashion industry are many and some are unlikely culprits as they pose as purely consumer protection laws but are used by government and advocates to punish the industry into submission. Participants in the textile & fashion industries need to more aggressively prepare for the coming storm of regulation and enforcement actions in order to avoid having containers stuck in warehouses pending the outcome of lawsuits.

Examples of national laws include the E.U. Strategy for Sustainable and Circular Textiles; the Bangladesh Accord; Australian Modern Slavery Law;⁴ the Sustainability Compact;⁵ the Organization for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains; and the Uyghur Forced Labor Prevention Act.⁶ At your business ask – “How many of these laws were the management team aware of?“ and “Does anyone know when are the rules effective as to the business?” The answer to these questions are a good metric for how much work leadership has yet to accomplish.

Sub-national laws are equally as troublesome and far less likely to gain notoriety in the industry until after the first arrests and seizures of goods in transit. Take the example of the State of New York and the remarkable legislation entitled “New York Fashion Sustainability and Social Accountability Act,”⁷ and the example of the State of California

⁴ https://www.fashionrevolution.org/aus tralia-blog/an-australian-modern-slavery-act-what- does-it-mean-for-the-fashion-industry/

⁵ International Labour Organization. 2020 [cited 2024 Oct 28]. Sustainability compact for the Bangladesh ready-made garment industry. Available from: https://www.ilo.org/publications/sustainability-compact-bangladesh-rmg-industry

⁶ H.R. 6256 effective June 2022, penalizes American companies that become involved in funding (directly or indirectly) China’s perceived forced labor program in Xinjiang effecting the Uyghur people. https://www.cbp.gov/trade/forced-labor/UFLPA

⁷ Not yet law, though, the State law as written requires clothing companies with annual revenues over $100 million to disclose and mitigate the climate and social impacts of their production, including greenhouse gas emissions, production volume, water use, and toxic chemicals, in line with the Paris Agreement. Companies must map at least 50% of their suppliers and report wages relative to local minimum wages, with all data uploaded to a public government database. Noncompliance could result in fines of up to 2% of revenues.

legislation known as “SB62;”⁸ These are two prime examples of the power of States to influence the trade of nations. These American States have a large influence on the fashion industries (in particular) and these laws have already caused global impacts which are not readily apparent.

Aspirational proposed national laws, such as the Americas Trade and Investment Act;⁹ and France’s fast-fashion tax¹⁰ are part of the evolving landscape of regulation that is moving very quickly from proposal to action.¹¹ This regulatory wave reflects the use of either punitive measures (France) or financial incentives (America) to force changes in the textile & fashion industry practices. All of these laws are also tools for national protectionist policies which avoid World Trade Organization (WTO) prohibitions on trade restrictions through benign “justifications.”¹² Resultant is the manufacturers and retailers – must be alert at all levels of the global value chain and must continually professionally assess regulatory compliance of the supply chain in each country (or State) into which the textile or fashion is sold. Are you ready for that burden?

Stay Informed – Join A Trade Association –

The obvious outcome of a reasoned inquiry is that the manufacturers and retailers – must be alert that all levels of the global value chain are continually subject to multi- directional threats of prosecution or (worse) that textiles or garments will get turned away at the border rather than delivered. Avoid that chaotic outcome – business must perform professionally prepared assessments of regulatory compliance for each country (or State) into which the textile & fashion is sold. Larger companies should consider staff position(s) exclusively focused on the compliance book in a manner similar to

⁸ The law prevents piecework payment, broadens the powers to collect unpaid wages, extends compliance liability to the brands using the producer, and creates extraordinary remedies for the worker. https://legiscan.com/CA/text/SB62/id/2434679

⁹ The bill, which is not law, is intended to use incentives to encourage textile waste management and circular fashion re-use policies by manufacturers and producers. The preamble to the bill declares the law is the “only major strategic economic plan to counter China’s growing geopolitical and economic power in the Western Hemisphere…” https://www.cassidy.senate.gov/wp-content/uploads/2024/03/Senate-Americas-Act-Section-by- Section.pdf

¹⁰ In March 2024, France’s National Assembly unanimously passed a bill imposing steep penalties on fast-fashion products due to their environmental impact. These products are almost exclusively from China and other low wage Asian countries. Leading brands may face fees of up to €10 ($10.90) per item by 2030 for products deemed most environmentally damaging. This bill is not law as of this writing. The bill would also ban fast-fashion companies from advertising in France and would require them to display information on the circular economy—a product’s reuse, repair, redesign (recycling), and environmental impact— alongside its price on websites and apps.

¹¹ Fashion brands selling in North America and the European Union “import” almost all of the B2C garments (whether measuring the materials or the final products). The current state of the industry obscures the traceability of the components of garments whether through trade secret protections or legal structures to avoid place of origin candor.

¹² These “justifications” reflect also the increasing global awareness of the textile & fashion industry effects on the environmental and human rights.

larger food importers addressing that regulatory system. The complexity and the penalties found in the trade restrictive laws argue in favor of this serious approach without delay.

Join a trade association which is good at following the legal environment and prolific in its newsletters and seminars.

Consider the following:

• AAFA – American Apparel & Footwear Association
  • https://www.aafaglobal.org/
• EURATEX – European Apparel and Textile Confederation (membership only through a national association which is already a member)
  • https://euratex.eu/
• GFA – Global Fashion Agenda – Global Fashion Agenda is a non-profit organisation that fosters industry collaboration on sustainability in fashion to accelerate impact.
  • https://globalfashionagenda.org/
• Fashion United – Global B@B Fashion Marketplace –
  • https://fashionunited.com/federations
• UKFT – UK Fashion and Textile Association.
  • https://ukft.org/
• Textile Exchange
  • https://textileexchange.org/

Stay informed and attend the sessions to get ahead of the tidal wave of regulation.

Backdoor Trade Restrictions Disguised As Consumer Protection –

Sustainability in the fashion industry is a decade long goal¹³ – and – with protective trade laws being erected in the largest markets such as North America and the EU the textiles imported to these regions are being squeezed out. It is not coincidental that

¹³ Fashion Industry Charter for Climate Action. https://unfccc.int/climate-action/sectoral- engagement-for-climate-action/fashion-charter ; FashionCharter@unfccc.int ; During 2018, fashion stakeholders, under the auspices of UN Climate Change, worked to identify ways in which the broader textile, clothing and fashion industry can move towards an holistic commitment to climate action. They created the Fashion Industry Charter for Climate Action, which contains the vision to achieve net-zero emissions by 2050.

The Fashion Industry Charter for Climate Action contains a series of principles addressing climate change. These principles go beyond previous industry-wide commitments. The centerpiece of the document consists of a target of 30% GHG emission reductions by 2030 and a commitment to analyze and set a decarbonization pathway for the fashion industry drawing on methodologies from the Science-Based Targets Initiative. These targets, as well as the other principles, are a clear demonstration that fashions leaders are serious about urgently acting on climate change and is keen to set an example to other industrial sectors.

these general regulations on “sustainability” enhancements¹⁴ are also imported textile & fashion killers. Unfortunately, the damage is indiscriminate ignoring the well performing and the not so. It also favors the large, wealth, institutional businesses at the expense of the small overseas entrepreneur.¹⁵

Most nations that do not have a coherent national consensus on industrial policy for textiles & fashion are instead seeing government by government prosecutions which are harnessing consumer laws on fraud and misrepresentation. These prosecutions penalize any party to the textile & fashion transaction who makes “false or misleading claims” about sustainability of the garment or materials sold. These incidents of fraud are commonly referred to as “greenwashing” and this spasm of enforcement is highlighting the intersection of obvious trade protectionism and the aspirational altruistic fashion sustainability goals which the well intended claim to be supporting. (Read more about “Greenwashing” at our library – https://substack.com/@rssimonlaw/p-153532559 ).

Intersection of Sustainability & Nativist Industry Protective Legislation –

The Digital Product Passport (DPP)¹⁶ is a significant EU component, enhancing traceability and potentially relocating textile production back to Europe.¹⁷ The comprehensive approach of the strategy addresses a host of environmental impacts of fashion and supports European clothing manufacturers. Digital product passports will be fully implemented for every product sold in the EU by 2030. The EU will start by prohibiting the destruction of unsold consumer goods as of July 19, 2025. The

¹⁴ “***main goals are to ensure all textile products on the E.U. market are durable, repairable, recyclable, made largely from recycled fibers, free of hazardous substances, and produced respecting social rights. It also aims to educate consumers to pay more for higher quality, make reuse and repair services more profitable, and hold the textiles sector accountable.” Navigating Global Fashion Policy, Mizrachi, M.P. (2024-12-23) https://doi.org/10.20935/AcadEnvSci7452 ¹⁵ It should be predictable that the smallest foreign enterprise in textiles will be shut out of the EU market in the same manner that the same size food producer is currently. It is neo-colonial hubris that skews the regulatory structure to impose so many obstacles to importation of a finished product in food (currently) and textiles (prospectively) that only raw materials are ever eligible for importation from former colonial provinces. South African berries face half the regulations as South African jam made from the same berries. Africa remains a client state of the West through these anti-competitive regulatory structures – regardless of the altruistic justifications pinned to them.

¹⁶ The DPP is part of the Ecodesign for Sustainable Products Regulation (ESPR), which is an initiative of the Circular Economy Action Plan. The Circular Economy Action Plan is a policy under the EU Green Deal, which aims to make the EU carbon neutral by 2050.

¹⁷ The DPP is a digital file that contains information about a product’s life, including:

• Where it comes from;
• The materials used;
• Its environmental impact;
• How to dispose of it;
• Energy efficiency; and
• Repair options.

European Commission is required to define the Digital Product Passport standards for the implementing regulations in 2025.

Consider the European Directive on Empowering Consumers for the Green Transition [Directive (EU) 2024/825]; The Anti-Greenwashing Directive, this regulation establishes new requirements for environmental claims about products, ensuring that consumers receive reliable, comparable, and verifiable information.¹⁸ The European Directive on Empowering Consumers for the Green Transition (ECD)¹⁹ is a law that aims over time to protect consumers from misleading information about a product’s environmental, social, or circularity aspects.²⁰ The ECD entered into force on March 26, 2024, and member states must apply it by September 27, 2026.²¹ The ECD amends the Consumer Rights Directive²² and the Unfair Commercial Practices Directive²³ to require several material changes in business operating procedures ²⁴ such as the placement of a “Sustainability Label” on any “green” products.²⁵

Businesses should review their internal processes for making environmental claims and sustainability labelling if selling into the EU. Also, consider whether the statements made to consumers are unfair or misleading. Prohibited are any “generic environmental claim” which is an environmental claim lacking clarity and specification on the medium where it is made. The only “green” claims allowed inside the EU are those that refer to recognized excellent environmental performance which can be shown by compliance

¹⁸ The Green Deal is one of the most ambitious policies of the EU which aims to make the bloc “go green” by the year 2050. The law involves holistic cross-sectional policy structures that can align all industries from manufacturing to finance to ensure that each industry is well aligned to make the EU sustainability goals. The law aims to cut greenhouse gas emissions by 55% by 2030 and intends to create a cost-effective and socially fair green transition for the industries currently operating EU.

¹⁹ The approval of Directive (EU) 2024/825 of the European Parliament and Council, dated February 28, 2024 modifies Directives 2005/29/EC and 2011/83/EU, focusing on empowering consumers for the green transition through better protection against unfair practices and more accurate information about the consumer goods sold there.

²⁰ Aspects of “circularity” include durability, reparability or recyclability; Aspects of environmental or climate-related claims relate to carbon or climate neutrality. Other covered claims focus on the social aspects of the products which include labor conditions, workplace safety, respect for human rights, and gender equality by the manufacturer.

²¹ The Directive must be transposed by each EU member state into national law by March 27, 2026, and applied by same from September 27, 2026.

²² Directive 2011/83/EU

²³ The ECD will operate alongside the Green Claims Directive (GCD), which will create a specialized regime to govern environmental claims, and is currently in the early stages of the legislative process.

²⁴ Directive 2005/29/EC.

²⁵ There must be clear and relevant information supporting any product’s environmental or social claims. Further, producers must ensure consumers have better information about a product’s durability and repairability identifying components of a product that when replaced allow for the proper function of the product.

with relevant EU laws.²⁶ For example, do not get entangled – If there is an environmentally friendly delivery option then these options should be identified as such with particular care being taken to not overstate the environmental consequences of such delivery option in the specific instance of the consumer transaction. There are more relevant examples found in a review of the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.²⁷

AGOA Pathway Around USA Textile & Fashion Restrictive Regulations –

The EU, for 2025, is going to become a minefield for all African exporters except the largest, most prepared, and best financed to implement measures. The bright spot on this horizon of restrictive regulation for the remaining African exporters is in the United States markets where the 25 year-old African Growth and Opportunity Act (AGOA)²⁸ continues to prop-up the reformation of African textile & fashion industries with tariff-free imports. AGOA provides qualifying countries with duty-free market access for these textiles & fashion garments, provided that exporters show adherence with the Rules of Origin (RoO) and the more general administrative requirements of AGOA such as providing the textiles “certificate of origin.” As of 2023 there were 25 of the 35 AGOA beneficiary countries participating in the tariff-free program which required the countries have adopted laws to implement the “Apparel Visa System” (AVS). The AVS is the mechanism through which the certificate of origin is collected, the RoO compliance is assured, and the content of the apparel inputs is monitored and measured for metrics including the quantity of locally sourced content, the point of origin, and the tariff categories of the textiles and garments made from these fabrics.²⁹ The AVS intends to prevent trade deflection and transhipment, whereby goods made elsewhere (China & India) are merely routed through a beneficiary country (of trade preferences) with no or insufficient local value-adding activities having taken place.

South African textile & fashion producers, thanks to AGOA, are the best positioned producers and exporters into the US market (replacing China and India) as a result of the waiver of global restrictive regulatory structures. However, South Africa, since 2014

²⁶ https://www.sidley.com/en/insights/newsupdates/2024/04/new-eu-directive-strengthens- consumer-protection-laws-on-greenwashing-and- circularity#:~:text=On%20March%2026%2C%202024%2C%20the,of%20the%20GCD%20pr oposal%20here).

²⁷ November 2017 – Establishing “Responsible Business Conduct” in the fashion industry. Adopted by 48 national governments, the manufacturer must adopt policies, identify harms, prevent or mitigate harm, track performance of goals, communicate with self & vendors, and act on remediation of failures. These goals are progressively being harmonized across the member nations. International investment agreements increasingly include language requiring sustainable development. Participants engaged in due diligence are encouraged to focus on prevention measures first.

²⁸ https://agoa.info/about-agoa/kb/article/16163-what-are-some-of-the-specifics-of-the-rules- of-origin-under-agoa.html

²⁹ https://agoa.info/about-agoa/apparel-rules-of-origin.html

has seen the collapse of commercial scale finished textile & fashion export capacity. There is a complete depletion of the indigenous fiber growing and processing supply chain for wool, cotton, even synthetics. Almost everything currently exported and labelled “Made in South Africa” is made using imported fiber, yarn, or fabric (even wool). Should fiber supply capacity return to South Africa through focused industrial policies and supportive financing, then it must be met by and be matched by production capacity increases. Only South Africa, with action on such rehabilitation of textiles industrial policies, will be positioned by the end of 2025 to leverage the AGOA status to replace US imports of textiles & fashion now coming from impaired countries such as China and India. The provincial legislatures which want the jobs and investment must act to meet the moment rather than wait for the Government of National Unity (GNU) to do something.

The US textile and apparel industry is one of the most significant sectors of the US manufacturing industry. According to the National Council of Textile Organizations, the

U.S. textile industry employed over 500,000 people and had shipments totalling $64.8 billion in 2023. The US is the second largest exporter of textile-related products in the world, with over $29 billion in exports in 2021. In recent years, US companies have focused on reorienting their businesses, finding more effective work processes, investing in niche products and markets, controlling costs through advanced technologies, and reshoring/nearshoring production. Protectionist measures are piling on and may well continue with the 2025 commencement of the Trump Administration which is a practiced and professed protectionist cabal. The outlook for exporters to the US who are not in AGOA protected status is very dim.³⁰

Predictions for the Next Four Years –

Industrial Policy of the US will be the global driver of textiles and fashion economics in every EU and BRICS country in 2025. The next four years may be more challenging than the 2017-2021 years of the first Trump Administration. Each manufacturer needs to takes steps to insulate themselves from that future – starting with opening US based offices and finishing facilities³¹ as soon as possible in 2025. There is little time to delay since the immigration visas and processing capacity at USCIS will quickly be absorbed by other foreign competitors.

“America First” is not a new idea and it is not an idea that will diminish in popular appeal anytime soon – with or without Trump or Trumpism – South African business must be prepared for this future.

³⁰ https://ncto.org/2024-state-of-the-u-s-textile-industry-address/

³¹ Cut, Make, Trim (“CMT”) for garments, and other value added processes for rolled textiles (i.e., coatings).

“The idea that the US government should engage in industrial policy stretches right back to the days of American independence. In 1791 Alexander Hamilton, the first secretary of the treasury, approached Congress with a report – the Report on the Subject of Manufactures – that outlined a strategy to develop the US manufacturing sector. Its goals were to catch up with Britain and build the material base for a powerful military. The report consisted of 11 principles, including direct government subsidies to targeted industries, protective tariffs, government procurement contracts, tax exemptions for manufacturing inputs and support for infrastructure improvements.

Hamilton concluded his report by detailing sector-specific policies for major US manufacturing sectors, including copper, iron, cotton, grain, glass, gun powder and books. The report’s main ideas were introduced gradually over subsequent decades.”³²

The US in 2009 had an industrial policy which valued high-tech and knowledge intensive industries. US policy capitalized on its engineering and scientific resources to produce a continuous stream of new high-tech products and services, including ’green energy’ technologies. Foundational policy principals were that the policy and incentives tied to the policy were intended to strengthen US exports, solve pertinent climate change issues and expand domestic employment. Maintaining and extending the US’ international leadership in high-tech and knowledge intensive industries, such as health, the environment and energy, was the industrial policy priority of the Obama administration.

In 2024, the Trump and more generally Republican political campaigns demonstrated at the polls that the majority of the voting population did not see the benefits of the Obama era knowledge intensive industry boom. Similarly, the Biden era jobs creation miracle, adding 14.6 million new jobs in the post-COVID recovery, reflected a 10.3% increase in overall employment but not in the sectors that mattered to the voting majority.³³ Despite the historic rise in wages for salary and hourly workers (caused in part by State specific increases in Minium Wage Laws) it was the price of “bacon” that the social media sources attribute to the disaffection with the Democrats’ Industrial Policy thus the political candidates across the ballots.³⁴ The 2025 Trump version of his industrial policy will be a rehash of his 2017 efforts by all predictions.³⁵ If rolled out by the docile Republican led Congress, as advertised, in the first 100 days then South

³² https://www.civitas.org.uk/content/files/IndustrialpolicyintheUnitedStates.pdf

³³ https://econofact.org/factbrief/were-more-jobs-added-under-biden-than-in-the-first-three- years-of-any-president

³⁴ Donald Trump was the first Republican President since 2004 (George W. Bush 2^nd term) to win the popular vote and the electoral college vote. https://thehill.com/homenews/nexstar_media_wire/4976301-when-was-the-last-time-the- republican-party-won-the-popular-vote/

³⁵ https://www.project-syndicate.org/commentary/trump-defective-industrial-policy-by-dani- rodrik-2017-01

African businesses must expect textiles & fashion imported into the US to become prohibitively expensive except for the products from AGOA countries.³⁶

President Donald Trump supported AGOA during his first term, as a component of his African Strategy, and is reasonably expected to do so again. But, Trump’s recent pledge to impose 25% tariffs on imports from Canada and Mexico—the United States’ two largest trade partners—coupled with threats of 100% tariffs on BRICS countries³⁷ underscores the element of uncertainty about his intent once in office for a second time.³⁸ AGOA’s likely reauthorization under a second Trump administration relies in its mathematically inconsequential total role in the US trade picture; and the announced Trump administration plans to expand trade in critical minerals (i.e., rare earth metals) found in Africa. The Trump pronounced policy need for the United States to reduce its reliance on importing critical minerals from China and Russia, upon whom it relies for 80% of these imports gives AGOA hope of reauthorization. AGOA beneficiaries are many which boast of some of the world’s largest reserves of copper, platinum, cobalt, lithium, nickel, manganese and graphite.³⁹ Trump’s America wants those minerals.

The critical minerals quest may well save AGOA reauthorization from a threatened Republican led legislative defeat. But the last 18 months of South African international actions as a BRICS founder and enfant terrible ⁴⁰ of Middle East politics are certain to bake into the legislative cake one form or another of punishment from Trump and the Republicans. Punishment threats are real. ⁴¹ It happened to South Africa with chicken parts in 2015 where the Republican controlled Congress threatened the AGOA status of South Africa if she did not concede on US dumping of excessively brine soaked frozen

³⁶ The AGOA program is set to expire in September 2025, which re-authorization is viewed by textile professionals as a pivotal moment for Africa in the textile revival. AGOA-based exports to the United States have fallen from a high of $66 billion in 2008 to $9.3 billion in 2023.

³⁷ Which include Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates.

³⁸ Changes to AGOA can also be weaponized and aimed at punishing AGOA beneficiaries who are viewed as undermining American interests by the Trump Administration. For example, in 2018, the Trump Administration suspended Rwanda from exporting clothes to the United States duty-free following the latter’s decision to ban the import of second-hand clothes.

³⁹ https://www.weforum.org/stories/2024/06/why-investing-in-innovation-is-essential-to- securing-critical-minerals/

⁴⁰ A French phrase that literally translates to “terrifying child” used to describe someone who is unconventional, blunt, or shocking in their behavior.

⁴¹ In 2015, the AGOA renewal negotiations included an agreement to allow an annual quota of US bone-in chicken to be imported without anti-dumping duties. Now, South Africa allows duty-free imports of chicken from the US as part of the AGOA agreement. Local producers have complained about cheap imports from overseas firms. The South African Poultry Association (Sapa) has said that small producers would be hardest hit. US lawmakers have requested to move the next AGOA Summit out of South Africa as a first form of punishment, which could signal the plan to have South Africa excluded from the agreement privileges in some form or degree. This result could cause a significant rise in local chicken prices as well as crater the 2030 National Development Plan.

chicken into South Africa.⁴² There is no reason to think that similar threats will cease in 2025 when the heavier baton of “reauthorization” is in Republican hands.⁴³ South Africa while under the Government of National Unity (GNU) must seriously re-evaluate its refusal to align its foreign policy to complement that of the Trump Administration. Unlike Biden, this US Administration will overtly and without diplomatic nicety penalize “publicly expressed dissent” from otherwise sovereign nations. The South African textile industry cannot afford the penalties of national hubris at this point in its redevelopment.

South Africa Must Act Now To Thrive In 2025 –

Credits, Credit Guarantees, First Loss Assumptions, Tax Abatements, Transportation Assistance, and Workforce re-training bursaries are the tools the textile & fashion industry need now in order to meet the global market opportunity of 2025. The Government of National Unity (GNU), rather than dither, needs to focus on AGOA reauthorization without penalties to South Africa – even if that focus requires the President making a path to the Mar-a-Lago Club, renting a suite next to Elon Musk, waiting his turn for dinner with President Trump, and then bend the knee, kiss the ring, and make the concessions he demands – or South Africa will not rehabilitate its textile & fashion manufacturing in this economic cycle or for generations to come.

South Africa must have the AGOA market available in order to prosper in textiles & fashion without the expense of the European Union regulatory schemes. South African businesses must open branches inside the US in order to secure market presence before AGOA terminates in September 2025. It is possible to keep the export businesses intact during any period of AGOA suspension if South African businesses act promptly to open offices and facilities inside the US in 2025. Make plans today to travel to the US and scout locations and logistics but use caution when describing your activities to the immigration authorities to avoid difficulties (read more at our library – https://substack.com/@rssimonlaw/p-153382879 ). Leaders need to stay in visa compliance while performing these missions.

⁴² In 2015, Congress passed legislation to extend the African Growth and Opportunity Act (AGOA) through 2025. The legislation, Public Law No: 114-27, amended the Trade Act of 1974 and the AGOA. The extension included an out-of-cycle review of South Africa’s eligibility for AGOA benefits. https://agoa.info/downloads/south-africa-review-2015.html ⁴³ This threat does not overlook the bi-partisan effort to reauthorize AGOA in the form of

S.4110 sponsored by Chris Coons (D) and James Risch (R) in 2024. The bill did not become law before the end of the last Congress so a new bill must be introduced and proceed through committees to the floor for a vote.

Inadmissibility Waivers – Optimistic Predictions. 2024 – Sep-11. Recent clarification, specifically on the “significant public interest” category in the Department of State Foreign Affairs Manual (FAM), provides optimism that grounds for inadmissibility could be waived if the applicant has skills that are of a significant benefit to the US government or a US employer. This optimism is a result of the FAM providing additional context for Consular officers in their assessment of the “significant public interest” criterion for granting a waiver of the “inadmissibility” condition. Consular officers are now instructed to consider an applicant’s educational background and skills as a benefit to the public interest, especially if the applicant has a U.S. degree or is qualified for skilled labor and seeks to work in the U.S. in a field related to their credentials. If the applicant overstayed a visa as a young person, had a criminal conviction long ago, or was less than candid in a former visa application in the past, then a waiver may well be possible if that same applicant possesses skills of importance to US industry (such as computer science, oil or mining engineering, or other STEM related skills).

In particular, the Immigration and Nationality Act (INA) identifies grounds of inadmissibility for those seeking to enter the U.S. The INA provides a waiver of inadmissibility if certain conditions apply. *** Admission to the United States would advance a significant U.S. public interest including the positive effect of the planned travel on U.S. public interests described above in 9 FAM 305.4-3(C) paragraph c(3)*** FAM 305.4-3(E)(a)(4).

That waiver can be “expedited” if there is a “clear and significant public interest.” FAM 305.4- 3(F)(a).***Expedite requests must be reserved for cases with an urgent humanitarian need for travel, such as medical treatment or a death in the applicant’s family and cases where there is clear and significant U.S. government or public interest. ***

When a visa applicant submits a waiver request to the U.S. Consulate, consular officers weigh a number of factors (set out in the FAM) when assessing the request, including the recency and seriousness of the activity causing ineligibility, purpose of travel to the U.S., the positive or negative effects of the travel on U.S. public interests, whether the incident was isolated and singular or a pattern, and evidence of reformation or rehabilitation.

The guidelines do not clarify whether “credentials to engage in skilled labor” must be U.S. based or can include qualifications gained outside the U.S. However, it is reasonable to assume that both types of credentials should qualify, given the priority placed on addressing U.S. labor needs in key industries. https://fam.state.gov/fam/09FAM/09FAM030504.html

20 of the 22 Action Items are satisfied by the Financial Intelligence Centre (FIC) of South Africa with the publication and gazetting in February of the final Guidance Note 7A. Decisive action before the end of June 2025 is required to position South Africa to leave the Grey Listing behind. Successful and sustained enforcement on the remaining two Action Items would enable South Africa to be considered by the FATF for delisting from the “grey list” at the October 2025 Plenary. Hurry – There is no time to waste in recovering pride of place in the global financial structures.

ZUPTA Criminals Reduced The Nation To International Financial Pariah – South Africa was “grey listed” in February 2023. Now the Financial Action Task Force (FATF) announced on February 21, 2025 the satisfaction of four of the final six outstanding Action Items at the conclusion of its latest plenary meetings in Paris, France. That leave only two more to satisfy – and – the hardest two of all. South Africa is now deemed by FATF to have satisfied or significantly satisfied 20 of the 22 Action Items set forth in the FATF recommended and South African proposed corrective Action Plan, leaving only two Action Items to be addressed.¹ The Plenary agreed to give South Africa more time to address these two remaining Action Items than what was offered in the original sanction order grey listing the nation. Instead of now, South Africa has until the next reporting period (that runs from March 2025 to June 2025) to substantively resolve these two Action Items. Should South Africa address both outstanding Action Items and complete action by June 2025 it is theoretically possible that it would enable an exit from “grey listing” by October 2025. Successful meaningful institutional reforms on these two Action Items would enable South Africa to be considered by the FATF for delisting from the “grey list” at the October 2025 Plenary. The February 2025 assessment was led by the International Monetary Fund which recommended the positive rating to FATF members at the Plenary.

¹ FATF criticised South Africa’s failure to show serious commitment to prosecuting individuals linked to state capture. Countering terrorism financing remains a key deficiency for South Africa. In 2021, FATF gave the country one of its lowest scores for countering terrorist financing. The warning signs became clear by the end of 2022, but despite urgent legislation introduced to avoid grey listing, it happened in February 2023.

The end of the kleptocratic regime² of Jacob Zuma on February 14, 2018 did not automatically restore all the functions of good government disassembled and discredited over the prior nine years.³ The Zuma purposeful refusal to sign the Financial Intelligence Centre Amendments Act (FICA) was the most significant cause of the grey listing.⁴ The law remained unsigned until April 26, 2017 such was the opposition within the ruling African National Congress party and Zuma’s faction.⁵ There were other hi-jinx in favor of the ruling cabal including a weekend decapitation of the financial cluster blocking a raft of self-dealing, and a dual taxation treaty with the UAE to shield purloined wealth sequestered in Dubai from South African taxing authorities.⁶

Consider the context in which FATF determined grey listing was a required action. The Zuma presidency commenced on May 9, 2009. When he installed his cabinet the Moody’s Rating was already pegged at A3 Stable (July 18, 2009) which was an improvement on the Baa1 Positive (June 5, 2007) rating fought for by President Thabo Mvuyelwa Mbeki and his team. The rating progressively tumbled as the Zuma corruption broke open in the press with the Moody’s Rating dropping to Baa2 (April 3, 2017) and further still to Baa3 Stable (March 23, 2018) after his departure from office February 14, 2018. Moody’s last adjusted the rating to Ba2⁷ Stable on April 1, 2022 – before grey listing – which is a “junk status”⁸ and Moody’s has not altered that rating to date.

The Financial Action Task Force (FATF) Plenary under the two-year Mexico Presidency led by Elisa de Anda Madrazo concluded February 21, 2025.⁹ Delegates discussed action plans on key issues including the promotion of financial inclusion (for under represented areas) and the continued revisiting of the standards best suited to advance the risk-based approach to enforcement of laws and identification of malign actors in the financial markets. South Africa was reviewed for progress in addressing the Zuma era decay and delays which allowed South Africa to “fall behind” the other members of the FATF when it came to preventing international financial crimes.

Mercy From Neglected Friends & Peers – The mercy shown by South Africa’s neglected international friends and peers was noteworthy. It was not completely earned if measured by actual implementation by a fully committed government and industry. It was mercy show as a debt repaid from past salutary actions of South Africa. The continued stand alone effort of Treasury and SARB are not enough to implement the hard parts of the crime fighting agenda of FATF. The decision by the FATF Plenary to extend the South African government’s reporting cycle for the two Action Items on investigations and prosecutions for serious and complex money laundering and terror financing activities reflects the fact that these are the most demanding goals of every country’s systems. The Zuma era led to a weakening of the formerly well regarded South African regime for combating money laundering and terrorist financing. Now South Africa must demonstrate that the improvements are sustained over successive FATF reporting periods using all the tools of government and private industry. The Government of National Unity may be in a good political position to succeed in this goal of demonstrating multiple quarters of sustained vigilance of the financial system monitors as money flows inbound and outbound from South Africa are scrutinized.

The FATF report concluded that South Africa has a solid legal framework for combating money laundering and terrorist financing but significant shortcomings remain. In particular, the country needs to pursue money laundering and terrorist financing in line with its risk profile, including by proactively seeking international cooperation, detecting and seizing illicit cash flows, and improving the availability of beneficial ownership information. Authorities need to make better use of the financial intelligence products provided by South Africa’s financial intelligence unit (FIC). The country should also improve the application of the risk-based approach by accountable institutions and supervisory personnel inside such entities.

Actions Rather Than Speeches – The Financial Intelligence Centre (FIC) of South Africa concluded a comprehensive consultation process, resulting in the publication of the final Guidance Note 7A (GN 7A) on 13 February 2025.¹⁰ GN 7A replaces Guidance Note 7 (GN 7), and was developed through consultation of government and private industry between April 2022 and June 2024 in South Africa. GN 7A provides updated guidance on how accountable institutions should implement their Risk Management and Compliance Programmes (“RMCP”) under the Financial Intelligence Centre Act, 2001 §42B (FICA), emphasizing a more robust approach to identifying and mitigating money laundering and terrorist financing risks, including a requirement to assess risks associated with new products, services, and technologies within the business operations; essentially strengthening anti-money laundering and counter-terrorism financing regulations in the country. The significant changes are found in Chapter 4.¹¹

Tough Love From South Africa’s Peers – Grey listing is not arbitrary nor politically driven as the process is a peer review product using mutually agreed rules of conduct by the financial regulators of the participating countries.¹² South Africa’s membership dates back to 2003, and the Reserve Bank and Treasury are well versed in the protocols all of which are products of South African participation. The FATF continually identifies and reviews jurisdictions (such as South Africa) with strategic AML/CFT deficiencies that present a risk to the international financial system and closely monitors their progress.¹³

The degree of transparency by this international non-governmental group is reasonably calculated to inform the attentive public. The FATF publishes two statements at the end of each plenary meeting, in February, June, and October. These statements provide a short summary of the recent actions taken in accordance with each jurisdiction’s action plan, as well as a list of the strategic deficiencies remaining to be addressed.

The FATF’s International Co-operation Review Group (ICRG) oversees the process. For all countries under ICRG review, such as South Africa, the FATF requires a high-level political commitment that the jurisdiction will implement the legal, regulatory, and operational reforms required by the action plan. Four regional Joint Groups of the ICRG carry out the reviews, covering: Africa, the Americas, Asia/Pacific, and Europe/Eurasia/Middle East and North Africa. Each jurisdiction under review has the opportunity to participate in a face-to-face meeting to discuss the analysis of the Joint Group in advance of FATF plenary meetings.

What South Africa Must Accomplish Before June 2025 – The comprehensive risk assessment regime must be upgraded and enforcement tightened in a quantifiable manner. This requires a broader business risk assessment beyond just client risk, encompassing all aspects of the institution’s operations, including new products, delivery mechanisms, and technologies.

Examples include accountable institutions updating their Risk Management Compliance Programs (“RMCP”) to reflect the new FATF guidance, including detailed documentation of systems and controls for managing money laundering and terrorist financing risks. Risk mitigation controls and enhanced Know Your Customer (“KYC”) are required with self-audits to ensure effectiveness. The RMCP may require a group-wide standard RMCP, but only if there are clear outlines of what applies to different entities within the group. The highest level of management are required to approve the RMCP and to then personally ensure compliance with the RMCP. The mandate appears to be a non-delegable duty for senior management. The highest level of management is now clearly solely responsible for the RMCP effectiveness.

Alignment with FATF standards – End Zone In Sight – South Africa’s FIC through its Guidance Note 7A (GN 7A) process aims to address outstanding deficiencies identified by the Financial Action Task Force (FATF) regarding South Africa’s anti-money laundering and counter-terrorism financing regulations. There have been material amendments to the new Chapter 4 of GN 7A (previously Chapter 4 of the GN 7), which provides guidance to the board of directors (where the accountable institution is a legal person with a board of directors), senior management (of an accountable institution without a board of directors), and persons holding the highest authority in accountable institutions in relation to the Risk Management and Compliance Programme (RMCP) obligations of an accountable institution as set out in section 42B of the Financial Intelligence Centre Act (FICA).

¹² The FATF grey list, also known as “jurisdictions under increased monitoring,” is a list of countries identified by the FATF as having strategic deficiencies in their AML/CFT regimes. ¹³ The FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in two FATF public documents that are issued three times a year. https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html

All accountable institutions supervised by the Financial Intelligence Centre (FIC) were required to submit a copy of their risk management and compliance programme (RMCP) to the FIC, in terms of section 42(4)(a) of the Financial Intelligence Centre Act, 2001 (Act 38 of 2001), by close of business on Wednesday, 12 March 2025.

The FIC has noted that they will not accept standard templates which are being offered in the marketplace – this is not simply a tick box exercise but a detailed risk analysis and mitigation document. EXACTLY follow the FIC instructions on how to save and name their submission documents and then also to upload the latest board-approved RMCP. It is important to note that any approvals obtained post the release of FIC Guidance Note 7A will have to follow the 7A rules such as the directors statement that each fully understands the documents, has received any training and guidance necessary so that he/she can appreciate the contents of the RMCP, and a statement that he/she has not delegated responsibility or liability to any other person and can apply the document.

Each accountable institution must submit the RMCP electronically using the FIC goAML web platform https://www.fic.gov.za/wp-content/uploads/2025/03/2025.3-GN-RMCP-Letter- Request_250304.pdf

References

² https://pari.org.za/wp-content/uploads/2017/05/Betrayal-of-the-Promise-25052017.pdf

³ https://www.news24.com/fin24/zuma-lobbied-not-to-sign-bill-that-will-scrutinise-bank- deals-report-20160905

⁴ https://hsf.org.za/publications/hsf-briefs/the-fic-amendment-bill-and-the-presidential- signature

⁵ https://www.fic.gov.za/wp-content/uploads/2023/09/2017.6-MR-The-FIC-Amendment-Act- signed-into-law-.pdf

⁶ https://www.gov.za/documents/income-tax-act-agreement-between-south-africa-and-united- arab-emirates-avoidance-double

⁷ Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk on the Moody’s scale.

⁸ “junk” is the same as “sub-investment grade” for government debt instruments. A downgrade to “junk” status means that a country is perceived as a defaulting risk because it can’t pay back what it has borrowed. As a result, investors require higher compensation for the risk taken, expressed in a risk premium. Junk status means investors have to reassess the risk premiums required when making equity valuations and bond pricing, and premiums paid on insurance against default.

⁹ Financial Action Task Force (FATF) Plenary February 2025 https://www.fatf- gafi.org/en/publications/Fatfgeneral/outcomes-fatf-plenary-february-2025.html

¹⁰ https://www.fic.gov.za/wp-content/uploads/2025/02/2025.2-GN-implementation-of-fic- act.pdf

¹¹ The FATF (Financial Action Task Force) Chapter 4, specifically Recommendation 4, focuses on confiscation of property related to money laundering and terrorist financing, including measures that allow laundered property to be confiscated without a criminal conviction. https://www.fatf-gafi.org/content/dam/fatf- gafi/methodology/FATF%20Methodology%2022%20Feb%202013.pdf.coredownload.inline.pd f

Government Officials, State Owned Enterprise Officers, Ruling Party Cadres and National Anti-Corruption Law Imposed Legal Restraints

(Profile – The United States Foreign Corrupt Practices Act)

Corruption ruins both businesses and national economies. There are best practices to consider adopting in order to avoid legal and ethical entanglements.¹ Honest and ethical business practices are not measured by a universal standard. Rather, the custom and practice of the business location often dictates the boundaries of what is “dishonest” when compared to what is “culturally sensitive.” However, local custom means absolutely nothing when confronted with criminal prosecution by the United States Department of Justice (USDOJ). You and your company need to observe the lessons of those prosecuted under US anti- corruption laws in order to identify what the USDOJ considers “ethical” regardless of where the acts are performed. Follow the discussion in brief of the USA law known as the Foreign Corrupt Practices Act (FCPA).

Please be “practical” as a business leader working with overseas interests. Recognize, for example, that the ruling party (in South Africa and elsewhere in post-colonial Africa) frequently deploys “party cadres” (loyalists) to government positions or government influenced positions in publicly owned businesses.

These deployments poses a risk to you (personally) and to your company that you may inadvertently engage in one or more corrupt practices. South Africa, due to its political choices, has made the risk of corruption higher, and thus the business climate less attractive to USA based investment. No American wants to risk reputation and fortune in order to bring progress and prosperity to South Africa (or any country).

Doing business across borders involves more than the financial returns so business leaders should engage local “guides” to identify corruption risks and mitigate them. USA citizens, non-citizens, and USA companies are all subject to the long arm of American anti-corruption legal jurisdiction which includes Africa and companies (and officers) who wish to work in Africa. As a business leader you must be alert to the myriad types of conduct which is “dishonest” and which violates the FCPA without regard for local customs. There is no legal exception for culturally accepted behaviors. In particular, ruling party cadre deployments (i.e., the children of government members or employees) may fall within the definition of the “officials” the FCPA is intended to isolate away from the USA business leaders. Seek local assistance to identify whether the intended investment will involve “officials” directly or indirectly.

For example, in South Africa, the ruling African National Congress (ANC) is well known to make government jobs and state owned enterprise (SOE) positions available exclusively to party members (without regard for competence).² There are court cases brought by the opposition parties challenging the constitutional basis of such hiring preferences.³ The allegations of the cases should raise the level of concern and the level of conduct scrutiny for all business leaders wishing to remain in compliance with the FCPA. We are all on “notice” that the employ or board member, or officer to whom we are speaking or with whom we are working may well be considered an “official” under the anti-corruption laws of several major economies. Frequent news stories identify suspect business transactions involving “officials” in the form of family members near and not so near, recognized confidants, and intimate or business partners.⁴

The Foreign Corrupt Practices Act (FCPA)⁵ was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Specifically, the anti-bribery provisions of the FCPA prohibit the payment of money (or giving anything of value) to a foreign official to influence the foreign official in his or her official capacity. “Since 1977, the anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. With the enactment of certain amendments in 1998, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.”⁶

Violations of the FCPA start with any sort of “payment” or “value delivered” to an “official” for the purpose of advancing the business interests of the giver. The U.S. Department of Justice (DOJ) has adopted aggressive interpretations of the statute that apply with particular force. There are three significant issues: (1) the meaning of “foreign official”; (2) the meaning of “anything of value”; and (3) the use of third parties that make pass through payments to officials.⁷ The law is so all inclusive that the hiring of the children of officials or the relatives of officials has been viewed by the US DOJ as a violation.⁸ The USA based bank, JPMorgan Chase, in November 2016, was fined $264M for a program

¹ https://doi.org/10.1787/18151957 OECD(2003), “Business Approaches to Combating Corrupt Practices”, OECD Working Papers on International Investment, 2003/02, OCD Publishing.

² https://theconversation.com/south-africas-ruling-party-has-favoured-loyalty-over- competence-now-cadre-deployment-has-come-back-to-bite-it-199208

³ https://ewn.co.za/2023/01/30/first-of-two-da-cases-against-anc-cadre-deployment-policy- resumes-at-high-court

⁴ https://www.news24.com/news24/southafrica/news/r125m-ppe-scandal-govt-acts-against- top-officials-in-limpopo-20220317 ; https://www.news24.com/news24/southafrica/news/four- sandf-members-in-court-for-ppe-corruption-worth-r273m-20220926 ; https://www.iol.co.za/news/south-africa/mpumalanga/top-official-arrested-in-connection-with- r21m-in-ppe-corruption-443cd016-e6f3-4a40-be26-a268d37c1652

⁵ Foreign Corrupt Practices Act of 1977, as amended, 15 U.S.C. §§ 78dd-1, et seq.

⁶ https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act

⁷ https://www.lehmanlaw.com/resource-centre/faqs/administrative-law/faq-relating-to- fcpa.html#:~:text=The%20FCPA%20prohibits%20the%20giving,common%20way%20of%20 doing%20business.

⁸ https://www.hg.org/legal-articles/hiring-children-of-foreign-officials-may-expose-bank-to- bribery-charges-31177 ; https://www.hg.org/legal-articles/hiring-children-of-foreign-officials- may-expose-bank-to-bribery-charges-31177 ; it named “Sons & Daughters” which gave internships to the children of Chinese officials. The implications are clear that “dishonest” conduct can also be conduct which seems on its face to be innocuous. The risk of unintended corrupt conduct is sufficiently greater in less than transparent countries that a local guide should be engaged to identify risk and mitigate the risk.

Counter-Money Laundering & Registering Your Business in South Africa

What Every Foreign Business Seeking To Operate In South Africa Must Be Prepared To Disclose Is The Following “Compliance Packets”.

• Company statutory documents –Certificate of Registration, Memorandum of Incorporation, Certificate of Name Change (if applicable) and signed by a director of the company;
  
• Proof of physical operating address, e.g. invoice, rates bill etc. (less than 3 months old);

• SARS issued document confirming Income Tax and VAT registration number.

• Letter from the Auditors confirming shareholding;

• Directors resolution appointing the authorized representative of the Company;

• Certified copy of the ID document of the authorized representative;

• Certified proof of residential address of the authorized person, being not older than 3 months;

In respect of any individual or entity holding 25% or more in the Company:

• Certified copy of their ID and proof of residence, being not older than 3 months;

And, if applicable:

• Company statutory documents as above;

• Proof of physical business address.

Who Gets To Ask For Your Documents?

No business nor its officers and owners wants to disclose person information sufficient to enable identity theft or other criminal activity. The resistance to such inquiries is prudent, and efforts to purloin that information are real and constant. Vigilance is critical at all points of interface where such information is sought or volunteered. The responsible officer needs to ensure that anyone seeking information under FICA is actually entitled to the information. Further, the information should be “hand delivered” rather than posted, emailed, or cast into cyberspace. The only entities or individuals entitled to obtain your Compliance Packet are as follows: “Accountable Institutions” as defined under the FICA laws. Each must obtain from the business the Compliance Packet information and keep it current. This is not a mere “one & done” inquiry. This is a constant sequence of inquiry. “Accountable Institutions” include the following individuals and entities http://www.ssa.gov.za/Portals/0/SSA%20docs/Legislation/FIC%20Act%202001.pdf :

• Attorneys
• Auditors
• Trust Companies
• “Banks” however defined
• Securities Brokers
• Real estate agents
• Insurance Brokers
• Casino Operators
• Currency Dealers
• Financial Services Providers
• Any entity or person which sells, trades or “redeems” travelers’ checks (cheques)
• Any person who handles the money of others (“money remitter”)

Clients/Consumers include:

• Natural Persons
• Natural person acting on behalf of another, or
• Foreign national
• Close corporation
• South African company
• Foreign company
• Legal Persons
• Partnerships
• Trusts

A business owner is an entrepreneur with all the risk tolerance and reward that the French word implies. As an entrepreneur – you in particular- are a national and international job creator. Your efforts alone will pull the young and old, experienced and inexperienced, good and the “bad” off the unemployment rolls and thrust them into the tax paying workforce. You are building a new “family” and you are the leader, parent, confessor, and employee bank of last resort. In the United States, you are everything the politicians claim to love. In Europe and Sub-Saharan Africa you are similarly lauded but regulated into despair at times. The role you play is so important that as a national leader you should hire a “just as needed” team of professionals to address legal and accounting issues with business expansion. It is just too important an undertaking to omit a good team of advisors.

The advisors, in particular legal and tax, will provide conservative advice which can be summed up as “separate operations from assets, pay as few taxes as possible, and avoid all but the most necessary entanglement with government, banks, and partners/shareholders. In the advisors version of the doctors’ Hippocratic Oath they uniformly will advise you in a manner to “cause no harm” to you in the first instance. Understanding the thinking behind advisors advice (some of whom also don’t wish to have responsibility for possible failures) it remains important to retain your vision, hope, and enthusiasm for the enterprise. So, hire them, but remember that you are the “risk taker” which is why you create wealth.

A good tax or legal advisor will tell you that the expansion of the business will mean more invested capital and more risk of loss. If there are assets at risk, personal or enterprise, then it is standard practice in most countries to form two distinct entities or companies – one to operate the business and a separate one to hold any items of value. One example of this structure is found in the diagram enclosed. There are many permutations of the concept depending upon where the income is earned, tax considerations for the owners or participants, and even considerations of where the entity is controlled. The legal analysis for the United States owner is presented in summary on a useful Web tool – Findlaw – where articles discuss different business forms – http://smallbusiness.findlaw.com/incorporation-and- legal-structures/pros-and-cons-why-form-a-corporation.html . The commercial web based legal source – Legalzoom – offers a summary in more general terms – https://www.legalzoom.com/articles/partnerships- pros-and-cons . A more user friendly discussion of the form of business is found in the publication Entrepreneur. http://entm.ag/22dH526 . The form or structure of business is really driven by how you plan to manage the business (alone, partners, or with employees), and how you plan to raise the capital needed to fulfill the dream of a successful larger enterprise. In sum, the basic rule is that an entrepreneur wants to keep separate the “goodies” from the risk of loss, and keep the governance of the enterprise as simple as possible. . A tax professional can also provide a reasonable prediction of the “tax optimization” structures which you also want to consider in order to maximize the return on your investment. As with all commercial transactions – the fewer taxes you pay – the harder it is to raise capital based upon your earnings. So, your professionals should advise you on structure based upon how much capital you wish to raise and how you intend to raise it. Thus, using a local attorney or tax preparer who can form these businesses, obtain tax identification numbers (from relevant taxing authorities), and help you with local regulations is the best way to safeguard your investment of time and money. There are readily available online forms if you don’t want to do use professionals. However, among other examples, bank accounts will require some particular documents after they are formed which these professionals can obtain easily with practice. Consider hiring professionals to help the formation process, accounting methods, and to set up the regulatory compliant operational procedures needed for success. The Big Four consulting firms offer comprehensive services. https://andersonadvisors.com/entity_formation/ . These are expensive as a general matter. Less expensive though possibly requiring more coordination by you as the entrepreneur would be to use several local service providers for legal, tax, and other regulatory services. Consider getting an estimate from the Big Four first, then look at local alternatives. Some savings are available with the Big Four for comprehensive services (i.e., Anderson offers a Platinum Membership which includes a menu of inclusive services without limitations). https://andersonadvisors.com/platinum-membership/ . Shop the price of advisors and find the best fit – not the cheapest.

Increasing the scale of business when you as entrepreneur, move from the less formal sector to the more formal and regulated one, presents more than mere formation and structure challenges. You already know the risks associated with your business and the like. Advisors can explain the risks of various structures. However, you may not have a completely informed understanding of the capital requirements for regulatory compliance, meeting industry best practices, and the cash to have on hand for operating funds. Running a “bigger” business takes a surprisingly greater amount of cash on hand than running the “start-up” version. Forbes provides a good discussion of this situation. http://www.forbes.com/sites/davidroth/2013/05/08/launching-a-startup-how-much-money-do-you-really- need-and-from-who/#7d259f5f7f6c

The operation of a larger enterprise necessarily requires different personal skills than opening the “start- up” phase. If the entrepreneur is not familiar with running a larger operation with multiple employees, different taxing authorities, and increased regulatory scrutiny, then consider buying into a “franchise” of a larger operation that does something like what you want to do with your expanded enterprise. Not that I or anyone I work with “know” anything about what your business specifically requires, but through years of experience and similar with the published views of some knowledgeable opinion leaders, there is a direct positive relationship between the entrepreneur’s successful investment of time & money and the participation in a reputable national or international franchise. Business.com has an April 2015 study of 28,000 USA based franchises and the report is encouraging. http://www.business.com/entrepreneurship/does-franchising- pay/?utm_medium=referred&utm_source=email .                                                                          Respected franchises provide operational guidance, business training, and logistical support that they include in the fees and costs of the franchise privilege. The kind of support that a good franchise offers includes software for tracking the consumers on all levels, integrated with invoicing for funds owed and accounts to be paid, and frequently updated operational advice for changes in regulations (such as such as health, safety, and financial reporting).

Reputable franchises usually provide facilities and equipment support in the form of technical guidance on design and purchasing, as well as established relationships with lenders and investors for financing the franchise program. A good first look by an entrepreneur at a franchise opportunity will usually identify both the positive opportunities and possible weakness in the entrepreneur’s own business model. So, consider taking a first look at a franchise as a part of increasing your scale.

Changing your “scale” presents you with predictable challenges. Every entrepreneur encounters the same type of problems – tracking personnel (human resources), building and maintaining client relationships (customer satisfaction), government regulatory compliance (at many levels often not previously experienced by the start-up), and the changing volumes of money needed to address all of these challenges at the same time. Frequently, the entrepreneur becomes much more “management” than ever conceived at first. The passion that lights the flame for growth, is frequently overwhelmed by the flames of business “brush fires” as the entrepreneur becomes a full time manager of others.                                                            There is a direct relationship between your happiness as a business leader on the one hand and the recruitment and retention of one or more good managers on the other. You may wish to consider “hiring” a manager whose job is to handle all of the administrative challenges so you may focus on growing the business. If can recruit an existing manager of a similar larger operation you respect, then you could budget in the business plan to hire and assign to this person all of the administrative and management duties which will otherwise fall to you as owner if you do not. Combining the hiring of a good “manager” with a good “franchise” opportunity would also greatly increase your likelihood of financial success and happiness in the business (some better franchises will require hiring an experienced manager for just this reason). A good management program is a predictor of success.

Harvard Business Review reported in 2012 that excellent management rather than financial maneuvers resulted in a 1.5 times greater earnings for the companies which focused on improving market performance through better management. https://hbr.org/2012/10/the-true-measures-of-success . Consider the important value of excellent management when expanding your enterprise.

The challenge presented by both “money issues” and “management issues” is often addressed (whether solved or not) by entrepreneurs through either a (1) a rapid growth expansion plan – using large investment capital of borrowed or raised equity (for the expenses of hiring talent and securing proper materials and infrastructure) or (2) a slow growth expansion plan – using non-institutional capital and opportunistic acquisitions of talent and resources. How you, as the entrepreneur, select between these two traditional approaches (if not any of several more creative pathways) should be influenced by criteria – (i) thorough detailed study, planning, and preparation of the expansion, and (ii) consideration of your personal level of risk tolerance, and (iii) often consideration of the quality of the opportunities presented by circumstances. The criteria seldom all arise at once. There is never “enough” study or planning because the contingencies and variables are too many for even a blockbuster screen writer.

Risk is always present. You do your best to plan from the known facts and predictable variables as illuminated by your experience and the professional advisors. You do your best to account for your prejudices and bias either for or against risk-taking. Nature usually prevails whether you want it to or not. You are who you are in business. Opportunities do not appear on command. However, if you are considering business expansion, then some circumstances presented themselves and you see a “golden opportunity” either in the form of some circumstance that is just too tempting to look past or ignore. It could be someone offering capital, or a facility or equipment becoming available for “cheap”, or the appearance of the “right” person upon whose performance an ambitious business expansion can be based. However, seldom do all three conditions present themselves simultaneously. If they do, go out and buy a lotto ticket that same day. More often, the opportunity will present itself and the entrepreneur will need to go out and “build” the other two criteria. The first alternative (rapid growth) requires fundamental compromises (usually manifest in a loss of ownership, an increase in expenses, or both). The second alternative (slow growth) requires patience and loss of affordable potential business growth (either passing up the “cheap” opportunities or losing the dominant first in the market field position). Only you can decide which pathway to success to follow – though you should consider when following either – whether you can structure the expansion in a manner that reduces the “risk of loss” should one of the opportunities fail.

Regardless of alternatives chosen (rapid or slow) you will need to consider your enterprise structure in great detail. The structure of a business expansion, in particular of a start-up or small “cap” enterprise should focus on limiting the time the entrepreneur spends away from the core business being delivered. It doesn’t matter what the enterprise delivers, it will suffer, should the entrepreneur be focused away from the service delivery. One readily adopted risk management structure is to “out-source” the expansion employees. http://www.businessknowhow.com/manage/hire-temp.htm .                                     Using a recruitment and employment agency to place employees with the enterprise for specific contractual periods will reduce the risk of loss from human resources regulation. The agency takes the front line position for the entrepreneur in all matters relating to the temporary employee (including payroll, discipline, collective bargaining). Agencies are present in all North American, European, and Sub-Saharan Africa economic communities. In the United States each state governs what services agencies are allowed to provide on behalf of the entrepreneur. http://www.thehartford.com/business-playbook/in-depth/benefits-temporary- contract-employees . The entrepreneur should embrace this risk management approach since the agency is paid a fee for providing the worker, paying the taxes, and to assume all the risks of workplace injury (where comprehensive injury insurance is offered). Some risks are never delegable, of course, such as an unsafe workplace, but commonly underwritten employer risk is shifted to the agency exclusively through the employment contracts. Consider using outsourced labor as you expand the business in order to avoid front end loading personnel onto the financial burdens matrix of the expansion.

Capital formation is another distraction of the entrepreneur away from the core business. In particular, when debt service is due or when equity demands changes in operations the entrepreneur is very often forced to make “bad” business decisions. The list of reasons and the companion list of “bad” decisions is as lengthy as the imagination. There are several methods of capital formation which reduce the risk of distraction and may be worthy of consideration along both the rapid growth and the slow growth pathways. Crowdfunding is a very popular method of capital formation for small businesses. There are regulatory guidelines for which professional advice can be essential – though the concept and practice is present in all North American, European, and Sub-Saharan Africa economic communities. The World Bank as of 2013 predicted that it will surpass other forms of private capital formation. http://www.infodev.org/crowdfunding . Forbes reported on the trend in June 2015. http://www.forbes.com/sites/chancebarnett/2015/06/09/trends-show-crowdfunding-to-surpass-vc-in- 2016/#3e245d8e444b   The upward trajectory in use has not dipped. There are multiple entities offering the services as facilitators matching private capital to entrepreneurs, holding the funds raised pending the entrepreneur reaching the target goals, and disbursing funds to the entrepreneur under a contract with the contributors.                                   Businesses as diverse as a baseball bat maker in rural Oregon www.MacDougallBats.com and a documentary film in South Africa https://www.facebook.com/stroopdiefilm/ use the crowdfunding model to raise capital. The United States of America is the leader of crowdfunding both in terms of capital raised and in terms of modern regulation of old institutions (such as the Securities and Exchange Commission “SEC” which regulates securities and investment vehicles). The type of investor which may participate and the amount to be raised without regulatory supervision are much more open as a result of The Jumpstart Our Business Startups Act (JOBS Act), signed into law by President Obama on April 5, 2012. The SEC has allowed broad solicitation of funding. More details are available on the SEC web site – http://www.sec.gov/News/Article/Detail/Article/1365171492649#.UovQNMQhh8G and the fact sheet can help you decide if this is the type of funding you wish to seek. The crowdfunding facilitators undertake to insure that the funding is done in compliance with the relevant regulations and laws in the countries where they seek funds. The European Union has its own version of permitted regulation and facilitators who undertake to comply with those regulations. Review the Commission’s fact sheets if you would like to access those capital markets. https://ec.europa.eu/growth/tools-databases/crowdfunding-guide_en . In Sub-Saharan Africa crowdfunding as an international funding facility is a variation on an old theme of localized “credit associations” (think in terms of cooperatives, business associations, and religious charities) which are allowed by a variety of regulations and agencies. However, until more substantive regulatory coordination occurs most crowdfunding can only avoid complications if it is funding for “goods and services” (i.e., authorizing receipt of funds by a company regulated by the South African “Banks Act”). Several countries are revising tax regulation to allow for donations of capital for future stock in “for profit” businesses in the form of crowd sourced equity capital. (i.e., South African companies which register with the Revenue Service as Venture Capital Funds as defined by Section 12J of the Income Tax Act qualify for non-tax treatment of funds received for investment purposes).

However, other agencies still labor under laws and regulations which have not yet been modernized to allow smooth crowdfunding (i.e., South African Companies Act No. 71 of 2008 at Section 100 requires all unregistered securities to have a compliant “prospectus” circulated to all potential investors). Rwanda and Tanzania suffer similar regulatory obsolescence despite being among the World Bank rated best places and the fastest growing economies in Africa. http://www.worldbank.org/en/region/afr/publication/africas-pulse-an-analysis-issues-shaping-africas- economic-future-april-2016 . Crowdfunding also provides an engine to test the market acceptance of the business model and provides some version of “viral” advertising in advance of the roll out of a larger business. Thus, for the expansion from start up to larger business crowdfunding should be considered in the both growth alternatives and favored in the slow growth version over commercial (bank) credit.

Take into consideration the factors discussed and then revise your expansion business plan in response to what you learn through this process. The business plan will be the governing document in your effort to focus your entrepreneurial energy, and the attention of the existing enterprise as you grow it.

Investors, lenders, partners, and your professional advisors too will need to be directed by the vision you set out in the business plan. One of the best interactive business plan tools, regardless of country within which you want to work, is the one hosted by the United States Department of Commerce. https://www.sba.gov/tools/business-plan/1 The Small Business Administration template is a great user friendly document that guides as well as challenges the entrepreneur to think through the big and little details. Consider this template when preparing the plan and know that it will take a reasonable commitment of time to complete it.

Importers into the EU faced Due Diligence Reporting requirements under the Regulation on Deforestation-Free Products (EUDR) which will NO LONGER apply starting on December 30, 2024, and instead will be phased in beginning December 30, 2025 (for larger companies) and June 30, 2026 for small and medium sized EU enterprises. See., https://www.euronews.com/my-europe/2024/10/07/eu- proposes-delaying-landmark-deforestation-law-amid-industry-pressure

The EUDR effectively prohibits the import, sale, or export of listed commodities and derivatives within the EU unless they are certified online with the EU as “(1) deforestation-free,” (2) produced in accordance with relevant local laws in their country of production, and (3) covered by a due diligence statement submitted electronically to an information system accessible to competent and customs authorities. Top of the list are palm oil, cattle, soy, coffee, cocoa, timber, rubber, and products derived from the listed commodities (such as beef, furniture, or chocolate). See., Annex I of the Regulation – https://eur-lex.europa.eu/legal- content/EN/TXT/?uri=CELEX%3A32023R1115&qid=1687867231461#d1e32-243-1 . The same obligations apply to specific relevant products listed in Annex I if made from, containing, or fed with those commodities.

Covered companies are banned from placing and making available in the EU market or exporting from the EU any covered commodities and products unless the items have a “reference number” which proves that a due diligence statement was filed with the Commission demonstrating that the covered commodity or product is deforestation-free and legally produced. Learn how to comply with the regulations here – https://green-business.ec.europa.eu/deforestation-regulation-implementation_en

Products not listed in Annex I are not subject to the Regulation, even if they contain commodities listed in Annex I. For example, soap will not be covered by the Regulation, even if it contains palm oil. Check your CN codes against the Annex I listings first then decide whether to register. The Combined Nomenclature (CN) is the EU’s eight-digit coding system, comprising the Harmonised System (HS) codes with further EU subdivisions. Each subdivision of the nomenclature used in Annex I is known as a ‘CN code’. The CN code has an 8-digit code number followed by a description and a duty rate. Depending on the case, it may contain a supplementary unit code.

The Information System where businesses will register their due diligence statements is ready to start accepting registrations in early November and for full operation in December. Operators and traders will be able to register and submit due diligence statements even before the law’s entry into application. https://green-business.ec.europa.eu/deforestation-regulation-implementation/deforestation-due-diligence- registry_en . Conducting due diligence is a core obligation of operators and traders under this regulation, which is not subject to any exemption.

The regulation, fortunately, does not extend to the packaging materials used to ship the Annex I listed items. In the case of a producer selling packaging to manufacturers (to protect the final product – not to be sold as a final product to consumers), the text “not including packaging material used exclusively as packaging material to support, protect or carry another product placed on the market” in Annex I under Wood HS code 4415 should be understood as follows:-

• If any of the concerned packaging is placed on the market or exported as a product in its own right (i.e. standalone packaging), rather than as packaging for another product, it is covered by the Regulation and therefore due diligence requirements apply.
• If packaging, as classified under HS code 4415, is used to ‘support, protect or carry’ another product, it is not covered by the Regulation.
• Packaging material used exclusively to support, protect or carry another product placed on the market is not a relevant product within the meaning of Annex I of the Regulation, regardless of the HS code under which they fall.

Most recycled paper/paperboard products contain a small percentage of virgin pulp or pre-consumer recycled paper (for example, discarded paperboard scraps from cardboard box production) to strengthen the fibres. Annex I states that the Regulation does not apply to goods if they are produced entirely from material that has completed its lifecycle and would otherwise have been discarded as waste as defined in Article 3, point (1), of Directive 2008/98/EC. Note – no obligation applies under the Regulation in respect of the recycled material. In the case of paper/paperboard which constitutes a recovered (waste and scrap) product, such paper and paperboard is exempt from the scope according to Annex I (see Chapters 47 and 48 of the Combined Nomenclature).

Beware – If the product contains any percentage of non-recycled material, then it is subject to the requirements of the Regulation and the non-recycled material will need to be traced back to the plot of origin via geolocation. Annex I also clarifies that generally, by-products of a manufacturing process are subject to the Regulation.

This exemption is important for manufacturers of commodities packaging in particular when operating in non-EU jurisdictions (frequently with more favorable cost structures). How the packaging materials get to the exporter of the Annex I items will become important part of the supply chain for the manufacturers of packaging products.

The EUDR entered into force on June 29, 2023, repealing the EU Timber Regulation, which focused primarily on illegal logging. The EUDR’s regulatory ambition is broader, aiming to curb global forest degradation and deforestation, protect biodiversity, and reduce greenhouse gas emissions, by placing significant new obligations and restrictions on companies that import, export, or sell certain products in the EU. The EU Deforestation Regulation aims to ensure that a set of key goods placed on the EU market will no longer contribute to deforestation and forest degradation in the EU and elsewhere in the

world. Deforestation and forest degradation are important drivers of climate change and biodiversity loss

— the two key environmental challenges of our time. The Food and Agriculture Organization of the United Nations (FAO) estimates that 420 million hectares of forest — an area larger than the European Union — were lost to deforestation between 1990 and 2020. Based on 2015–2020 deforestation rates, every hour the world is losing over nine times the forest surface of Brussels’ Bois de la Cambre, or every minute three times the surface of the Parc Léopold bordering the European Parliament in Brussels.

To comply with the forest degradation element of the ‘deforestation-free’ definition, companies will need to establish whether the forest type prior to and including 31 December 2020 was primary forest or naturally regenerating forest (the two forest types to which the ‘forest degradation’ definition applies), then assess whether the forestry activities associated with wood harvesting, as well as planned post- harvesting activities, could cause or bring about (induce) a conversion, or have caused a conversion, to a different forest type amounting to forest degradation. If there is evidence indicating that harvesting activities may induce forest degradation*, then the wood product cannot be placed on, made available on, or exported from, the EU market unless this risk is mitigated to no or negligible level.

If a company places a relevant commodity or product on the market or exports them, it is considered an “Operator” under the EUDR. An Operator can be the company that harvests wood and then sells it, but an Operator can also be the company that processes wood and then sells a relevant product (e.g. tables) and places this product for the first time on the market. The message to companies is that if your team is or has any plans to export into the EU anything related to palm oil, cattle, soy, coffee, cocoa, timber, rubber, and products derived from the listed commodities (such as beef, furniture, or chocolate) then this Regulation is more likely than not either going to apply to the CN coded products or an official at the port of entry will assume it applies. Plan accordingly.

Taking a holiday to the US and making content for your social media sites can get you into trouble – if you are really successful – because your tourist visa doesn’t allow you to perform “influencing” for which you are paid. Making content is considered “unauthorized work” by the USCIS under certain facts – and – since 2019 the USCIS has the authority to inspect your social media posts (and has inspected over 40,000 visitors in FY2023). If you qualify as an “Influencer” which is a subjective decision of the immigration officers, then receiving compensation (anywhere) for posts made in the US (sponsorships, payments in money, receipt of any value) can be unlawful. Do you meet the “Bianca Booth” test to rank as an “Influencer?” If you do, then put your phone down until you get the right visa.

Social Media Influencer Bianca Booth from Australia successfully received an “Influencer artist visa” in O-1B. Her social media presence, one million followers on Instagram, magazine articles noting her swimwear business, the agency agreement of the professional appearance booking company Prelude Management, and multiple peer review support letters all combined to establish that Bianca is an “Influencer” and she needed a visa allowing her to work in the US before posting.

One of the best visas for foreign national Influencers and content creators to Live/Work USA is an O-1B visa.¹ Specifically, the O-1B is for individuals with extraordinary ability in the arts or extraordinary achievement in the motion picture or television industry. Influencers should consider only the O-1B visa, and should not be accepting pay inside the US and should not be creating paid content in the US unless the Influencer has the O-1B visa.²

O-1B visa have been historically issued in a variety of “occupations,” including for sommeliers, fragrance experts, chefs, marketing directors, and Influencers and content creators. Since creativity and storytelling are key components in the work of Influencers and content creators, they fit in the O-1B (ARTS) category as an artist or “in the arts” as defined.

In the field of arts the criterion of extraordinary ability or achievement is defined as a high level of recognized accomplishments as evidenced by a degree of skill and peer recognition substantially above that “ordinarily encountered” so much so that the Influencer is described as “prominent”, “renowned”, “leading,” or “well-known” in the particular occupation area. USCIS must determine eligibility based on whether the totality of the evidence submitted demonstrates that the beneficiary meets the relevant standard.

As new forms of media productions, including various types of internet content, emerge, it can be more difficult for USCIS officers to determine which Influencer productions constitute motion picture or television productions versus an online recording on some platform.³ The argument for immigration reform to address this new type of artist is well documented along with methods to persuade the visa examiner to favourably review the application.⁴

Beware – It is very important to distinguish between O-1B(ARTS) and “MPTV” sub-class (motion pictures and television). Analysis of whether an online content piece(s) is within the motion picture or television industry (as self-described) is not limited to whether the piece will air on a television screen or in a movie theater, as the industry has grown to encompass some online content. While “static web materials and self-produced video blogs and social media content” generally do not fall into the MPTV category, the USCIS considers streaming movies, web series, commercials, and other programs with formats that correspond to more traditional motion picture and television productions to generally fall within the MPTV industry’s purview. The USCIS manual states that “[t]his interpretation of whether a beneficiary is working on a motion picture or television production, and is therefore subject to the O-1B MPTV requirements, generally aligns with that of industry organizations. Accordingly, USCIS may properly consider work on such productions to fall under the O-1B (MPTV) classification.”

The documentation of the distinction between Arts and MPTV activities resulting in the fame that is determinative of “extraordinary ability” finding is immensely important. USCIS interprets the eligibility requirements for O-1B (MPTV) to apply if the beneficiary will perform services for motion picture or television productions while in the United States regardless of other prospective services outside the MPTV industry. If, however, an artist’s work or appearance on an MPTV production is incidental to their non-MPTV work as an artist, the O-1B (MPTV) classification may not be appropriate, and the person may instead seek classification under O-1B (Arts). For example, USCIS does not necessarily consider artists who will be interviewed or will otherwise appear discussing, demonstrating, or promoting their work as an artist in a MPTV production to be working in the MPTV industry. This interpretation reflects USCIS’ longstanding practice, and is consistent with the statute, which includes more stringent consultation requirements for persons “seeking entry for a motion picture or television production,” and describes eligibility for persons in this industry separately from those in the “arts,” notwithstanding the artistic nature of their work.

The proof of “extraordinary ability” will not (by definition) fall squarely within the criteria set out in the rules. Instead, the USCIS manual encourages the Influencer to show “that a criterion is not easily applicable to the *** job or profession.” Although USCIS officers do not consider comparable evidence if the petitioner submits evidence in lieu of a particular criterion. The burden is on the Influencer to explain why the listed criteria are not readily applicable to the beneficiary’s occupation. A petitioner relying on evidence that is comparable to one or more of the criteria listed at 8 CFR 214.2(o)(3)(iii)(B) must still meet at least three separate evidentiary criteria to satisfy the evidence requirements, even if one or more of those criteria are met through evidence that is not specifically described in the regulation but is comparable.

Note – Influencers and content creators seeking an O-1B visa must be sponsored by a US-based company or qualified talent agent. This criterion is an absolute requirement which might frustrate even the otherwise qualified Influencer.

Alternatives – There are other possible visas to consider if the “Bianca Booth” standard is out of reach. Content creators, brand architects, or Influencers who hold a bachelor’s (or equivalent) or higher degree in marketing, online digital media, or a field closely related to their role, and will work in-house for a US brand or company, likely in a marketing or digital content or business development role, might arguably qualify for an H-1B.

For Influencers and content creators who are Australians holding at least a bachelor’s degree with a qualified US job offer and who will perform services in a specialty occupation related to their degree may be eligible for an E-3. Unlike an H-1B, there is no annual visa cap so no waiting for a visa number to be allocated. The relationship of the degree to the job offer is where the visa examiner is going to become mired if the documentation is not robust.

It’s important to note that the B-1 visa is not a digital nomad visa—the US does not have such a visa. Influencers and content creators in the US under a B-1 visa must not do any productive or paid work or undertake paid performances while in the US. If the B-1 visa holder engages in activities or employment prohibited under the B-1 visa they may face serious immigration consequences.

Reference List

1. USCIS – Authority to inspect social media of visa applicants and visitors (Referenced in FY2023 inspections)
2. USCIS – Bianca Booth O-1B case example (professional visa qualification through social media influence and documentation)
3. 8 CFR 214.2(o)(3)(iii)(B) – Evidentiary criteria for O-1B extraordinary ability in the arts
4. U.S. Department of State – O-1B (Arts) and O-1B (MPTV) visa distinctions and classification interpretations
5. Wong, Sydney. Influencing Immigration: The Need for Immigration Reform in the Age of Social Media Influencers, Loyola of Los Angeles Entertainment Law Review, Vol. 42.1 (2021), pp. 2–42
6. USCIS Policy Manual – Interpretation of extraordinary ability and comparable evidence
7. U.S. Visa Classifications Overview – EB-1A, H-1B, E-3, and B-1 visa requirements and limitations

Traveling to the US with a domestic worker or caregiver is allowed if the sponsor (employer) obtains a B-1 visa by satisfying all the criteria1, and upon arrival in the US completes the employment authorization processes including tax registrations, banking details for wages, and honors the employment contract. It seems simple enough – but – DIY applicants fail at a high rate – when unprepared. The technical requirements can be addressed in most instances.

However, the suspicion of human trafficking which attaches to this visa classification is considerable – and will result in a rejection even when all other criteria appear satisfied. Such a fear can also result in a criminal referral to local law enforcement. The suspicion will remain even when the visa is issued since airline personnel and border control authorities are all trained and sensitized to indicia of human trafficking. Prepare and plan understanding that new reality.

Summary – B Visa Will Allow A Domestic Worker to Accompany The Sponsor (Employer) To The US

Entry to the US, and working while inside the US, is authorized for certain domestic workers, personal assistants, or caregivers (“domestic workers”) accompanying or following to join U.S. citizens who have a permanent home or are stationed in a foreign country, or non-immigrant US visa holders in individuals in a B, E, F, H, I, J, L, or TN non-immigrant classifications. The rules are not DIY friendly, and there are several legal obligations that follow the sponsor and the domestic worker once inside the US. Failure to satisfy all the requirements can lead to an immigration ban, liability for civil and criminal laws relating to taxation, labor regulations, and social security participation obligations.

Domestic Workers/Caregivers 2 – How To Qualify For B Visa

The applicant domestic worker typically works for an employer who is frequently assigned overseas for two or more years and is coming to the US for a “temporary” purpose. If the employer (and domestic worker) qualifies then the B-1 visa status of the domestic worker engaged in such work authorizes such “employment” or “labor for hire” within the United States.3 The duration of the B-1 stay in the US is not more than 6 months consecutive; maximum total amount of time permitted in B-1 status on any one trip is generally 1 year if a timely extension is granted (in advance). Typically, the domestic worker must leave the US every 6 months to avoid a visa overstay and subsequent revocation. Review the following:

•       Domestic Worker Qualifications –

• The B-1 domestic worker must have one (1) year of experience; be at least 16 years old, and may not be a family member of the employer.
  • Domestic worker visa applicants (like most non-immigrant visa applicants) must prove to the satisfaction of the Consular Official that the domestic employee (applicant) has a residence abroad which she has no intention of abandoning.
  • Upon arrival to the United States the B1 domestic worker must immediately apply for work authorization from the USCIS and obtain an EAD card. Upon receipt of the EAD, domestic worker must also make application for a Social Security Number for reporting of payroll and income taxes on US earnings.

•       Sponsor (Employer) Qualifications –

• An employment contract or an oral employment agreement or other contract in English, translated to the worker’s native language which has been signed by both parties, and compliant with the Department of State criteria is required.7

• The employer-employee relationship must have existed for at least 6 months (longer if the sponsor is not a US citizen),4 or the employer must have regularly employed a domestic employee in the same capacity abroad.5
• Accompanying the domestic worker’s visa application must be a letter from the sponsor’s (employer’s) company attesting that the employer (sponsor) is subject to frequent international transfers lasting two years or more as a condition of employment AND that the current assignment in the United States will last for no more than four years.
• B-1 visa rules and regulations require the sponsor (employer) to assert in a sworn statement that the worker will be paid a “fair wage” for full time work. The “fair wage” for a B1 domestic worker visa must be not less than the minimum of the greater of the state’s minimum wage or the federal minimum wage.6
• An employment contract or an oral employment agreement or other contract in English, translated to the worker’s native language which has been signed by both parties, and compliant with the Department of State criteria is required.7
• Working conditions, hours, compensation relating to same, must be consistent with State laws where resident. No work is allowed under the visa outside of these legal restraints.
• Employment taxes must be paid by the sponsor (employer) as if the domestic worker were Employment Authorized.
• The sponsor (employer) must pay the B-1 domestic worker on either a weekly or bi-weekly basis and payment must be by bank check or a direct deposit of net payroll into a bank account owned solely by the B-1 domestic. US bank accounts are available for visitors is available in most commercial banks using a passport and visa.
• The sponsor (employer) must, if the domestic worker lives in the residence, provide adequate and reasonable accommodations. This will include at a minimum a private bed, access to a bathroom, kitchen facilities, and proper food storage.8
• The sponsor (employer) may not retain physical possession of the passport of the domestic worker.The sponsor must pay the transportation expenses of the sponsored domestic worker from their home country to the United States. At the end of the contract or when the contract is terminated with at least two weeks prior notice, the sponsoring alien must departs the US and the sponsor must provide the transportation from the United States sufficient return the B-1 domestic worker to the country of origin. The application must show proof of payment for transportation and an outbound departure on the visa rotation dates.9
• The sponsor (employer) will be the only provider of employment to the domestic worker.

How the Application Fails – Fear of Human Trafficking

Technical compliance with the criteria is not enough to gain a B-1 visa for the domestic worker. Beware the Trafficking Victims Protection Act (TVPA)10 – The law provides that domestic workers traveling on a B-1 visa are viewed with suspicion and concern that the B-1 being presented as a domestic worker is in fact a person being “trafficked.” Under US federal law, the term “trafficking in persons” can be broken into 2 categories: sex trafficking and labor trafficking. Every consular officer that a visa applicant encounters has received multiple trainings on human trafficking and recognition of the “signs.”

The term trafficking is a form of ‘involuntary servitude’ which includes a condition of servitude induced by means of (A) any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in such condition, that person or another person would suffer serious harm or physical restraints; or (B) the abuse or threatened abuse of the legal process.11

There are significant “markers” used by the visa examiner (as well as the officers at the Port of Entry) to subjectively evaluate whether the domestic worker is in fact a person being trafficked. The U.S. Customs and Border Protection (CBP)12 trains its officers and agents to look for signs of human trafficking. Some indicators that may indicate human trafficking include:

• Lack of control- The person may lack control of their communication devices, money, identification or travel documents, or they may be unable to leave their home or work environment.
• Fear or anxiety- The person may appear fearful or submissive, or they may be distrustful of authorities.
• Signs of abuse – The person may have injuries that appear to be the result of assault, or they may show signs of branding or tattooing.
• Lack of basic needs – The person may appear to be deprived of basic needs like proper clothing, food, water, sleep, or medical care.
• Lack of knowledge – The person may be unfamiliar with the local language or may not know their home or work address, or may speak of a “job” which they cannot describe in any detail.
• Controlled movements – The person may seem to have their movements controlled, or they may act as if they were instructed by someone else.

CBP also has a program called the Blue Lightning Initiative (BLI) that trains airline employees to recognize signs of human trafficking and report suspected cases to law enforcement.13 The SOAR to Health and Wellness Training Program is designed to help officers, professionals, and ordinary people identify and respond to those who are at risk of, are currently experiencing, or have experienced trafficking.14 Almost every department of the US government has some level of involvement in the fight against human trafficking.

This atmosphere is one in which the attempt to bring a domestic worker to the US is viewed with a very high level of initial suspicion by the visa examiner. There is a general opinion that if it doesn’t “look normal” the examiner is going to deny the visa. What constitutes as “normal” is solely up to the examiner in the country as the consulate making the judgment decision. A sponsor may not know or understand that the examiner is also a mandatory reporter of suspected human trafficking – and will report suspicions to the chain of command – which reports are always referred to law enforcement from the consular leadership.

NOTE: Victims of human trafficking are eligible for protected status under the specialized “T” visa if the victim announces to any officer of the United States that the person is a victim.15 The victim must reach the US in order to claim protection of this status.

CONCLUSION – Traveling to the US with a domestic worker or caregiver is allowed if the sponsor (employer) obtains a B-1 visa by satisfying all the criteria16, and upon arrival in the US completes the employment authorization processes including tax registrations, banking details for wages, and honors the employment contract. It seems simple enough – but – DIY applicants fail at a high rate – when unprepared. The technical requirements can be addressed in most instances. However, the suspicion of human trafficking which attaches to this visa classification is considerable – and will result in a rejection even when all other criteria appear satisfied. Such a fear can also result in a criminal referral to local law enforcement. The suspicion will remain even when the visa is issued since airline personnel and border control authorities are all trained and sensitized to indicia of human trafficking. Prepare and plan understanding that new reality.

Reference List

1. U.S. Department of State – 9 FAM 402.2-5(B)
   https://fam.state.gov/fam/09fam/09fam040202.html
2. U.S. Department of State – 9 FAM 41.21 Note 6.2
   Referenced in employment contract and worker eligibility criteria
3. U.S. Department of State – 9 FAM 41.22 N4.4
   Requirements on working conditions and contract obligations
4. 9 FAM 41.22 N4.4b(3) – Fair Wage Requirement
   Defines the wage standard for domestic workers under B-1 visa
5. 9 FAM 402.2-5(D)(1)(U)-(4)(U) – Employment Contract Conditions
6. 3 FAM 4128.2-1 – Housing Requirements for State Employees (analogous condition)
7. Trafficking Victims Protection Act (TVPA)
   https://www.uscis.gov/humanitarian/victims-of-human-trafficking-and-other-crimes/victims-of-human-trafficking-t-nonimmigrant-status/questions-and-answers-victims-of-human-trafficking-t-nonimmigrant-status
8. U.S. Customs and Border Protection (CBP) – Human Trafficking Awareness
   https://www.cbp.gov/newsroom/spotlights/protecting-innocent
9. CBP Blue Lightning Initiative (BLI)
   https://www.cbp.gov/border-security/human-trafficking/blue-lightning
10. SOAR to Health and Wellness Training Program
    https://nhttac.acf.hhs.gov/soar
11. National Human Trafficking Hotline
    Phone: 1-888-373-7888
    Text: 233733
    Live Chat: https://humantraffickinghotline.org