EB-5 Investment Escrow Accounts: Best Practices and Benefits for EB-5 Investors

Why Escrow is an EB-5 Program Best Practice and Feature in All EB5AN EB-5 Projects

Although the use of an EB-5 escrow account is not a requirement under EB-5 program rules, the use of an escrow account has become a best practice when it comes to EB-5 investment for several reasons.

First, the use of an EB-5 escrow account ensures that an EB-5 investor successfully files Form I-526 petition with the United States Citizenship and Immigration Service (USCIS) prior to the release of EB-5 capital into the EB-5 investment project.

Second, the use of an EB-5 escrow account provides increased transparency for both the EB-5 investor and the new commercial enterprise (NCE) by ensuring that the appropriate funds become available when it becomes necessary to transfer capital to the EB-5 job creating entity (JCE). The escrow agreement records will be required later in the EB-5 immigration process to demonstrate that 100% of each EB-5 investor’s required minimum investment amount has been fully invested in the JCE to satisfy the EB-5 program capital “at-risk” requirement.

Finally, for EB-5 regional center sponsored projects, an EB-5 escrow account also provides an EB-5 investor with an additional safeguard that the EB-5 regional center itself is in “good standing” prior to the release of EB-5 investment capital from escrow into the EB-5 regional center sponsored EB-5 investment project.

What is an EB-5 Investment Escrow Account?

An EB-5 escrow is a contractual arrangement formed and controlled by an escrow agreement made between an EB-5 issuer (in most cases this is the EB-5 regional center, or an entity controlled by the owners of the EB-5 regional center), each EB-5 investor in the project, and an escrow agent, normally a regulated U.S. bank. In most projects, the EB-5 investor reviews and approves the escrow agreement as part of the subscription documentation completed when subscribing to the EB-5 investment offering to join the EB-5 project.

The escrow agreement states exactly how each EB-5 investor’s capital investment will be held and then later disbursed upon the satisfaction of agreed to release conditions from the escrow account and into the new commercial enterprise (or NCE) of the EB-5 project. The most common release conditions for EB-5 funds to be released from escrow are: (i) that the EB-5 regional center sponsoring the project is in good standing; (ii) the EB-5 investor has successfully filed his/her Form I-526 petition and has received an I-797 receipt notice from USCIS; and (iii) the EB-5 investor has fully funded all required capital per the subscription agreement to the EB-5 investment offering.

EB5AN Partners with Signature Bank on EB-5 Investment Project Escrow Accounts

All EB5AN EB-5 regional center sponsored, and direct EB-5 investment projects utilize an EB-5 escrow account with Signature Bank. EB5AN has worked closely with Signature Bank on many regional center sponsored and direct EB-5 investment projects since 2014.

Established in 2001, Signature Bank is a full-service commercial bank in New York City. Signature Bank has extensive experience administering EB-5 escrow accounts and provides detailed account documentation and customized reporting.

“Signature Bank is uniquely qualified as an EB-5 escrow services provider. In addition to our extensive experience in the EB-5 space, Signature’s single-point of contact service model has won us the top spot for Attorney Escrow Services from the readers of the New York Law Journal several years running. The Bank’s strength and stability is evidenced by our ability to maintain exceptionally high capital ratios and consistently favorable deposit and credit ratings from Moody’s, Fitch and Kroll. And in December of 2021, Signature Bank earned its place on the S&P 500, a remarkable achievement for a bank of our size and relatively young age.” – Robert Sloposky, Group Director & Sr. Vice President | Signature Bank

“Signature Bank has a dedicated EB-5 banking services team with years of EB-5 escrow experience. We provide end-to-end EB-5 escrow services in order to make it as easy as possible for investors. Upon receipt of the investor’s funds, we proceed through our due diligence and accounting processes maintaining careful record keeping. Ultimately, we oversee the proper release of an investor’s funds to the NCE under the written terms of the specific escrow agreement.” – April Feely, Associate Group Director – Vice President & Director of EB-5 Funds Administration | Signature Bank

“When Signature Bank makes the choice to be an Escrow Agent on a project one of the considerations that we have is that we have looked a the Regional Center carefully and we have done our due diligence on the fact that they are bonafide, have a track record, and are in good order etc. and EB5AN certainly meets all those criteria and excels beyond that.” – James M. Sozomenou, Relationship Manager | Signature Bank

To learn more about current regional center sponsored and direct EB-5 investment projects with an EB-5 escrow account, please schedule a free EB-5 consultation.