Keep EB-5 Investments Safe Amid Bank Failures: How EB5AN Protects Investors’ Funds in Escrow

Escrow arrangements play a crucial role in the EB-5 investment process. When an EB-5 applicant invests in a project that is sponsored by a regional center, his or her money is often placed in an escrow account. The funds stay in escrow until the investor files Form I-526E with U.S. Citizenship and Immigration Services (USCIS). This practice helps protect the investor’s funds and ensures the money is available to the project developer, who will use the money to create jobs.

Recent events, however, have made some investors question the stability of the U.S. banking system.

In March 2023, regulators in California and New York closed Silicon Valley Bank (SVB) and Signature Bank, respectively. These closures marked the second- and third-largest bank failures in U.S. history.

As a result, many EB-5 investors are now concerned about whether their money is safe in escrow. Investors want to know that if the bank serving as their EB-5 project’s escrow agent fails, their funds are insured and will be invested in the project.

In this article, we discuss the measures that EB5AN has taken to protect its investors’ funds in escrow in today’s uncertain market environment.

What Happened to Depositors’ Funds in SVB and Signature?

SVB and Signature Bank were both insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC is an independent federal agency that protects deposits in banks and thrift institutions. It was formed in 1933 during the Great Depression to stabilize the U.S. financial system and to renew confidence in U.S. banking. Bank accounts insured by the FDIC are covered for up to $250,000 per account. Coverage is per person, per bank, and individual, joint, and trust accounts are insured separately.

When a bank like SVB or Signature Bank fails, the FDIC steps in to reimburse insured depositors their funds up to the $250,000 limit. The FDIC does this in one of three ways:

  • by issuing a check
  • by transferring the funds to another insured institution
  • by opening a new account at an insured institution

Depositors’ funds in both SVB and Signature Bank were protected by the FDIC and are not at risk. The government has said that uninsured amounts held at these banks will also be covered.

The FDIC plays an important role in keeping the financial system stable. Since it was formed, the FDIC has successfully managed more than 500 bank failures. In every case, no depositor lost a penny of insured money. This track record gives depositors confidence that their deposits are safe.

How EB5AN and Customers Bank Protect Investors’ Funds in Escrow

In response to recent events, EB5AN has taken swift action to protect investor funds. EB5AN is pleased to announce that it has partnered with Customers Bank for its EB-5 investors’ escrow arrangements.

Customers Bank is a leading commercial bank based in Pennsylvania. The bank has a wealth of experience in EB-5, and has worked with many EB-5 investors. Established in 2009, Customers Bank is known for its exceptional customer service and innovative technology. It has earned a reputation as one of the nation’s premier financial institutions. Customers Bank has more than $20 billion in assets.

Customers Bank is committed to providing outstanding service to its customers. The bank offers a wide range of financial products and services. It has received many awards and accolades, such as being named one of “America’s Best Banks” by Forbes in 2022. It has a four-star “Excellent” rating from Bauer Financial, a leading independent bank rating firm.

Insured Cash Sweep®: An Innovative Way to Protect EB-5 Funds in Escrow

EB-5 investments are at least $800,000, much higher than the FDIC coverage maximum of $250,000. While the FDIC is covering all deposits in SVB and Signature Bank, even those beyond $250,000, it may not provide extended coverage in the future. Customers Bank offers an innovative solution to fully insure each EB-5 investor’s $800,000 in escrowed funds.

Customers Bank offers extra protection to depositors through its Insured Cash Sweep® (ICS) program. The ICS program distributes deposits across multiple banks in the ICS Network in amounts below the FDIC insurance maximum of $250,000. As a result, deposits of more than $250,000 can still be insured by the FDIC. In the unlikely event that a bank fails, depositor funds will be secure and accessible through the ICS program.

The ICS Network includes hundreds of well-capitalized, FDIC-insured banks in the United States. With their funds spread across multiple banks, EB-5 investors benefit from a more diversified escrow arrangement. This strategy removes the risk related to having all funds held in one bank. In times of financial instability, taking steps to reduce risk is especially important.

The ICS program makes account management simpler for EB-5 investors. Though the funds are in accounts at different banks, customers have a single account to manage at Customers Bank. Depositors receive a consolidated bank statement, which allows them to easily track their funds in escrow and to understand their account status.

Invest in the EB-5 Visa Program with Confidence

In an effort to provide exceptional service and protect EB-5 investor funds, EB5AN partners with trusted, experienced institutions like Customers Bank. EB5AN’s investors can rest assured that through the ICS program, all of their escrowed capital will be insured by the FDIC. EB5AN is pleased to offer its clients a secure, diversified, and convenient escrow solution.

Contact EB5AN today to learn more about our escrow policy and commitment to keeping EB-5 investments safe. EB5AN has a dedicated team of professionals with backgrounds in investment banking and other relevant fields. We are available to guide EB-5 investors through the investment process and ensure their peace of mind.

Investing in an EB-5 project is a significant decision. It requires careful consideration and ample due diligence. At EB5AN, we understand the importance of keeping your investment as safe as possible. We are committed to ensuring the security and success of your EB-5 journey.