How Can EB - 5 Investors Prove the Lawful Sources of Their Investment Capital

How Can EB-5 Investors Prove the Lawful Sources of Their Investment Capital?

On their I-526 petitions, EB-5 investors are required to prove that they have obtained their EB-5 funds lawfully. Knowing how United States Citizenship and Immigration Services (USCIS) defines “lawful sources” is important to prepare a successful I-526 petition.

Source of Funds Documentation

USCIS accepts many different documents as evidence for an investor’s lawful source of EB-5 funds. Investors are required to include the following documents with their I-526 petition, assuming applicability:

  • Tax returns from the last five years for businesses the investor is associated with
  • Personal tax returns from the last five years for anything, including income and property
  • The registration certificate of foreign businesses the EB-5 investor is associated with
  • Any other documents that indicate the sources of EB-5 capital, including asset sale documentation, inheritance papers, and documentation proving the donation of the capital
  • Certified copies of any judgments of evidence of pending actions involving criminal actions or monetary judgments filed against the petitioner in the past 15 years in any country

On top of demonstrating that they have sourced their EB-5 funds legally, investors are also obligated to show that they have invested the capital in the EB-5 project. They can prove their investment through documents such as wire transfer records and bank statements.

Since no two EB-5 investors come from the same background, the process of documenting the lawful sources of EB-5 funds differs for each investor. Some capital is easier to trace than other capital, so EB-5 investors are advised to discuss the matter with an immigration attorney to determine the easiest way to document their funds. In many cases, investors must collect documents from various sources from the past several years.

Common Documents for Proving the Lawful Source of EB-5 Funds

Below are examples of some of the most common documents EB-5 investors use to prove the lawful sources of the money they invest in the EB-5 program.

  • Salary earnings: income tax returns, W-2s, bank statements, contracts of employment, and more
  • Sale of a business: a business registration certificate; documentation showing the sale of the business; documentation that demonstrates the investor’s ownership, directorship, or officership of the entity; a certified accountant’s appraisal of the business, and more
  • Investment earnings: stock certificates, bank statements, investment account documentation from the past three years or longer, and more
  • Sale of property: the purchase and sale agreements, a certificate of ownership, a deed tax certificate, a loan contract, bank statements, and more
  • Loans: loan documentation, appraisal of assets, documentation indicating the sources of the lender’s capital, bank statements, and more

The above sources of EB-5 capital are the most common, but there are many additional sources that USCIS accepts. Inheritance money, donations, money from lawsuit judgments, and divorce income are also valid as sources of EB-5 capital. In the case of a gift or donation from family or friends, however, USCIS requires the donor to provide the lawful sources of their gift money.

Advice for Proving the Lawful Sources of Funds

To facilitate the burdensome and tedious process of collecting the required documentation to prove the lawful sources of EB-5 capital, EB-5 investors can implement these tips:

  • Talk with an immigration attorney to figure out which sources to use for your EB-5 capital and determine which documents are necessary to collect.
  • Open a special account to store EB-5 investment funds before investing them to make them easier to track.
  • Leave plenty of time to obtain translations for any documents that need to be translated.
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