EB-5: How to Document a Lawful Source of Funds

Man giving stamp of approval on Investment

As an EB-5 investor, you will be required to invest only capital that is obtained through lawful means. Because of the dramatic increase in the past few years of I-526 petitions for EB-5 immigrant investor visas, there has been increased USCIS scrutiny that will require you to thoroughly document and identify the source of funds for your new commercial enterprise. The Administrative Appeals Office (AAO) may issue a “Request For Evidence,” (RFE) if they are unsatisfied with your documentation.

The good news, is that many different kinds of fund sources can be documented and approved in different ways. Ultimately, you will need to prove by a “preponderance of the evidence” that it is more likely than not that your investment funds came from a lawful source. At The Law Firm of Shihab & Associates, Co., LPA, our attorneys have decades of combined experience in these complex areas. Contact us by email or phone at 1-877-479-4USA (4872) for a consultation to discuss your planned investment and how we can represent your interests effectively.

What are the Requirements for Documenting the Lawful Source of My Investment Funds?

EB-5 regulations state that the evidence you will need to prove a lawful source of funds can be: tax records, business records, or any other source of evidence. However, at least five years of business and tax records are preferred, along with any other evidence that can demonstrate a lawful source of funds.

You can support these records with descriptive, detailed narratives, statements, and explanations—along with corroborating evidence. You should also include any evidence of pending judicial proceedings or past judgments of monetary awards against you within the past fifteen years.

Finally, it is essential to remember that any non-English language documents must be accompanied by certified English translations. This applies even to documents with mostly numerical data—such as tax returns or bank account statements—if they contain written words in a foreign language.

How do I Document My Income Tax Returns?

You should plan on submitting 5 years of income tax returns, both your individual and business returns, for all jurisdictions where you filed taxes. Otherwise, you will have to submit an explanation for why the tax returns were not or could not be submitted. There may be many valid reasons why you cannot submit 5 years of past tax returns. You may not have prepared them, you may not be required to file any, or your home country may not even require income tax returns. In these cases, you should make a declaration stating the reason why you were unable to file, and you should obtain a letter from a tax specialist or accountant in your home country explaining your home country’s tax filing requirements and why you cannot obtain these documents.

It is also important to remember, that the USCIS is not concerned with whether you paid all of your tax liabilities or met all of your obligations in your home country, only that you can provide evidence of employment, property, or other transactions that can clearly show a source of lawful funds for your EB-5 investment.

How do I Document My Business Records?

EB-5 regulations require documentation of “foreign business registration records,” which should include your articles of incorporation, registration or share certificates, or any other business registration records you may have available, for all the businesses you own.

How Do I Document the Actual Source of Funds?

It is also important that as an EB-5 investor you give a detailed narrative of the actual source of your funds, backed up by supporting evidence. This can include documentation from wage earnings, business transactions, a loan, gift, or any combination of these. Without this documentation, you could face an AAO determination of a failure to demonstrate a source of lawful funds. Any assertions you make must be backed up by factual evidence, meaning authenticated documents. This can also include declarations made by you or other relevant parties, so long as they are backed up by corroborating evidence.

How Do I Document the Path of My Investment Funds?

The path of the funds from their lawful source to your new EB-5 commercial enterprise also must be carefully documented with supporting evidence. This is to show the USCIS that you are the lawful, true source of the funds. The transferring bank account must be clearly identified as belonging to you, otherwise the AAO will request further evidence of fund ownership. If the path of the funds to your EB-5 investment is complex, an effective method is to use a diagram and map the flow of funds from your lawful source to the new commercial enterprise.

One of the biggest difficulties can be currency transfer laws. Some countries, notably China and India, have laws restricting the international transfer of money out of the country. China, for example, limits this amount to $50,000 per year, per person. This can make transferring funds from your personal account to the account of the new commercial enterprise very cumbersome.

Again, it is important to remember that USCIS will focus their inquiry into whether the source of funds was lawful, not that you have followed your home country’s fund transfer laws. You should be prepared to make narrative declarations and show detailed documentation on the path taken by your funds from your personal account to that of the EB-5 enterprise.

How to Contact Us

An experienced, thorough EB-5 immigration attorney will carefully review all of the legal and regulatory requirements involved with documenting your lawful source of funds. This will require close communication and collaboration with you to thoroughly document the source of your funds and to trace the path from your personal ownership to that of the EB-5 new commercial enterprise.

The attorneys at The Law Firm of Shihab & Associates, Co. LPA are experienced in all aspects of immigration law and would be happy to sit down with you and explain the entire process of filing for an EB-5 immigrant investor visa. Please feel free to contact us at the law office nearest you and put us to work for you on any of your immigration needs.

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