How to Prove the Lawful Source of Funds for EB-5 Investments

Learn how to prove that EB-5 funds were obtained lawfully.

What Is the EB-5 Visa Investment Program?

The EB-5 visa program was established in 1990 to stimulate the U.S. economy by encouraging foreign investors to fund U.S. commercial enterprises. EB-5 investors who meet all the requirements of the EB-5 visa program can get Green Cards for themselves and qualifying family members, including spouses and children younger than 21 years of age. The EB-5 visa program is one of the most expedited paths for foreign nationals to secure U.S. resident status for themselves and their qualifying family members.

Direct Investments vs. the EB-5 Regional Center Program

When making EB-5 investments, EB5 investors can choose between the direct investment model and the regional center program. Individuals who make direct investments put investment capital directly into a commercial enterprise. The other option is to invest in a new commercial enterprise through a United States Citizenship and Immigration Services-approved regional center. Regional centers are economic units that have been authorized to manage EB-5 investment projects.

There are a few differences between the direct investment model and the EB-5 Regional Center Program. The primary difference is that more lenient criteria apply to EB-5 regional center projects when it comes to proving that an investment has met the job creation requirement set forth by United States Citizenship and Immigration Services. The job creation requirement will be discussed further below, but, in short, each EB-5 investment must create 10 jobs.

Regional center projects may count indirect jobs toward the job creation requirement, while direct investments may only count direct jobs. Direct jobs consist of W-2 employees of the commercial enterprise. Indirect jobs do not have to be W-2 employees of the enterprise itself, but can be jobs created as a result of the EB-5 investment project’s economic impact.

In the case of regional center projects, indirect jobs can count for up to 90% of the jobs that go toward fulfilling the job creation requirement for EB-5 investments. This means that an investment in a regional center project must create at least one direct job.

Most investors choose to work with regional centers to make their EB-5 investments. The regional center program became even more attractive to investors after the passage of the EB-5 Reform and Integrity Act of 2022 in March 2022. The Act includes policies that provide additional oversight for EB-5 regional centers, making the regional center program an even more secure option for investors.

Requirements for EB-5 Investors

There are several requirements that must be met by EB-5 investors. Because one of the main goals of the EB-5 visa program is to create jobs for workers in the United States, each EB-5 investment must result in 10 jobs with full-time hours that last for at least two years. Additionally, an EB-5 investment must be made in a new commercial enterprise, and EB-5 investors must be involved in the management of the business in which they invest.

There are also requirements regarding the number of funds that must be invested. EB-5 investments in EB-5 projects located in targeted employment areas (TEAs) must be a minimum of $800,000. Investments in a new commercial enterprise not located in a TEA must be at least $1,050,000.

Targeted employment areas are high-unemployment or rural areas designated by United States Citizenship and Immigration Services. High-unemployment TEAs must have an unemployment rate higher than 150% of the U.S. average. To be designated as a rural TEA, an area must not be located in a metropolitan statistical area, must have a population lower than 20,000, and must not share a border with any municipality that has a population larger than 20,000.

EB-5 investment funds must remain at risk for the entire duration of the investment. This requirement is in place to prevent the simple “buying” of U.S. Green Cards and ensure that true investments are made. Another important requirement is that the investment capital put toward an EB-5 investment must be legally obtained, and the investor must submit paperwork to United States Citizenship and Immigration Services proving evidence of source of funds.

Submitting Form I-526E

The first step in the EB-5 process is to make a qualifying investment in a new commercial enterprise. Once a qualifying investment has been made, an investor must file Form I-526E, Immigrant Petition by Regional Center Investor, with the immigration service. Investors already in the United States may file Form I-485 to adjust their immigration status at the same time they file Form I-526E.

Upon approval of Form I-526E, investors and their family members will receive visas that give them conditional U.S. resident status. These visas last two years, near the end of which period investors submit Form I-829. Upon approval of Form I-829, investors and their family members will become permanent residents of the United States.

Along with Form I-526E, investors must submit paperwork proving their investment has met the requirements of the EB-5 visa program, including documentation showing that the capital put toward the EB-5 investment was attained legally.

Source of Funds for EB-5 Investments

Proving the source of funds is an important requirement that EB-5 investors must satisfy before they can be approved for U.S. Green Cards.

Common Sources of Funds Used for EB-5 Investments

Funds from a variety of sources are acceptable when it comes to EB-5 investments, as long as they are from a legal source of funds and evidence demonstrating their legality can be provided to United States Citizenship and Immigration Services. Each of the most popular source of funds for EB-5 investments is listed below:

• Salary and wages from labor, services, etc.
• Income from a business.
• Income from a patent.
• Funds earned from royalties on a publication.
• Interest accrued on an investment or savings account may be put toward an EB-5 investment.
• Loans: Foreign nationals may use loans to make their EB-5 investments, as long as they can prove that the loan provider sourced the loan funds legally.
• Gifts: EB-5 investors can use gifted funds from friends and family for EB-5 investments, as long as they can prove that the gifted funds were acquired legally. Individuals with children older than 21 years of age, or who do not want to immigrate to the United States themselves, may gift their children the funds to make an EB-5 investment.
• Donations can be used to make EB-5 investments, as long as investors can prove that the donation was sourced legally.
• Funds from a criminal or civil legal settlement.
• Inheritances.
• Income gained from the selling of property may be used to make an EB-5 investment.

This is not an exhaustive list of all acceptable source of funds for EB-5 investments. There may be other fund sources not listed here that can still be used for EB-5 investments.

Common Documents for Proving the Lawful Source of Funds

Before beginning the EB-5 investment process, an investor should ensure that they have documentation that can be used as evidence that funds have been lawfully sourced. This documentation must be valid and up to date. The following documents may be used to prove that EB-5 funds have been lawfully obtained:

• Documents showing salary and income sources: Documentation that can be used to prove that funds were attained through salary earnings include W-2s, personal income tax returns from the past five years, bank statements, employment contracts, and paperwork provided by an employer that explains how long an investor worked for them and how much compensation the investor received for their work.
• Earnings from a business: Funds earned from a business can be proven by providing documents like business tax returns, financial statements, employment contracts, and business registration records.
• Documents showing stock earnings: Documentation that can be used as evidence of investment earnings includes stock certificates from the past three years and investment account paperwork.
• Documents showing earnings from the sale of a property: To prove they acquired investment capital from the sale of a property or similar income-generating assets, investors can provide a deed certificate and/or a bill of sale.
• Documents showing that an investor has received a loan: If an investor uses a loan for an EB-5 investment, they must provide bank statements proving they have received the loan as well as documentation showing that the loan funds themselves were sourced lawfully.
• Documents showing that an investor has received a gift or donation: Investors must provide documentation showing that they have received a gift or donation, in addition to documents proving that the gift and/or donation funds were lawfully sourced.
• Documents showing an investor has received an inheritance: When an inheritance is used for an EB-5 investment, paperwork showing an investor received an inheritance, such as wills and/or documents from an estate administrator, should be included with Form I-526E.
• Documents proving a legal judgment in any country: Funds received as the result of a legal settlement such as a lawsuit or divorce case may be used toward EB-5 investments. In this case, a certified copy of the judgment must be provided to United States Citizenship and Immigration Services.

This list is not exhaustive. Other types of paperwork may be used as evidence that EB-5 investment funds were attained legally. Immigration attorneys can help investors determine what types of documents can be used to prove that their EB-5 investment funds were sourced through lawful means.

Moreover, bank account statements will be an important evidence source for almost every EB-5 source of funds. Tax returns and bank statements should be included in an EB-5 investors’ I-526E petition, and such bank statements should be official. A currency transaction report may also be necessary.

Advice for Proving Lawful Source of Funds

Before making an EB-5 investment, an investor should put EB5 investment funds in a separate account designated for that purpose. This will make it easier to track funds and prove an investment has been made.

EB-5 investors should be aware that any documents not originally in English will need to be officially translated and English copies will need to be provided to United States Citizenship and Immigration Services. Investors should leave ample time to attain any translations of documents that will need to be included in their EB5 applications.

It is in the EB-5 investor’s best interest to consult with an immigration attorney even before beginning the EB-5 investment process. Immigration attorneys can assist investors in navigating the intricacies of the EB-5 visa application process. Since each EB-5 investor’s situation is unique, an immigration attorney can help individual investors take the best approach to proving their funds have been legally obtained.

Evidence of Investment of Funds

In addition to proving that their funds have been lawfully sourced, investors will also need to provide evidence that they have made a qualifying investment and that their funds remained at risk for the duration of the investment. Investors can prove that they made a qualifying investment by submitting bank statements and paperwork documenting wire transfers. When it comes to proving that an investment has been made, it is especially helpful to follow the advice provided above and put investment funds in a designated account to make them easier to track.

Statements from a bank or financial institution and tax returns constitute an important part of source of funds documentation.

What Steps Can Interested Individuals Take to Get Started on the EB-5 Investment Process?

Any investor ready to embark on the EB-5 investment process should remember that it is of utmost importance to ensure that they can locate the appropriate paperwork to prove lawful source of funds. Having all this paperwork easily accessible will make the application process smoother for the investor. The more quickly an investor can gather the appropriate paperwork to be submitted with Form I-526E, the more quickly they will be able to be approved for a U.S. Green Card and become a permanent U.S. resident.

To find out more about how to prove an EB-5 investment meets the lawful source of funds requirement, or to get started on the EB-5 investment process, investors should contact EB5AN. Investors can get in contact with EB5AN by emailing info@EB5AN.com. They can also find a time to speak with a knowledgeable consultant about EB5 investment options and how to prepare bank accounts statements, report cash transactions, procure mortgage documents, craft financial statements, and prepare other source of funds documentation.