To combat money-laundering and address security concerns, USCIS thoroughly examines where an applicant’s money came from as well as the path of that money. For EB-5 investors, proving the lawful source and path of their investment capital is critical. They must, as per USCIS, provide documentation that meet’s the agency’s rigorous standards.
Where can EB-5 investment money come from?
An EB-5 applicant may have various potential sources of the money they invest. Salaried income may be one. Stocks, securities, and bank account deposits are other potentially lawful sources. For any and all sources, all investment funds must clearly show their original source.
Be strategic in choosing the source of funds & documentation
For investors and their immigration lawyers, choosing which funds to use and not use can be an important decision. Documentation must be complete and valid. If an applicant’s documents are not in English, they should ensure their documentation provides a translation.
Loans as a source of funds for EB-5 investment
Most often, a loan for an EB-5 investment comes from a financial institution. The collateral for the loan must be cited. Contrary to an earlier regulation, USCIS now only allows a loan as a source of funds if the investor is primarily liable for the loan. Also, the value of the collateral must be at least equal to the loan amount. An applicant can expect USCIS to make a request for evidence (RFE) if the value of the collateral is close to amount of the loan. Best practices advise that the loan amount is no more than 70% of the value of the collateral property.
Tax returns & other financial documentation
An applicant must have individual and corporate/partnership tax returns filed in any jurisdiction for the last five years. When an applicant’s preceding years’ tax returns indicate higher income, he or should should also submit tax returns for the three years with the highest income. Ideally, EB-5 tax planning should be conducted before filing, and with an expert.
Can gifts, inheritance, or divorce proceeds be a source of funds?
Sometimes a petitioner investing in an EB-5 project has received their investment capital by means of an inheritance. In such a case, the applicant must provide all documents related to that inheritance, including estate settlements of the deceased.
Gifts are another potentially valid source of funds. All documents related to that gift must be shared, including the registration of the gift money for tax purposes, and the source of income of the gift giver.
Money derived from divorce and other legal proceedings may be used. This includes alimony, and proceeds of civil lawsuits, along with official court judgments.
What happens when documentation is missing?
Sometimes an investor in pursuit of an EB-5 visa cannot obtain certain documents. In such cases, the applicant can file a declaration with a thorough explanation of why they cannot provide the missing documentation.
Though USCIS has, on occasion, accepted declarations of missing documents, this practice should be avoided wherever possible.