The Importance of a Reputable EB-5 Escrow Bank with Insured Cash Sweep (ICS) with Dan Topple of Customers Bank

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An escrow account acts as a protective financial buffer in transactions, especially significant ones such as those involving EB-5 investments. Escrow accounts are managed by a third-party escrow agent and are designed to hold funds securely until all parties meet the agreed-upon terms. Using escrow assures all parties that the transaction will be completed fairly and that funds will be appropriately distributed at the right time.

The Escrow Process: What is an Escrow Account?

Here’s a brief overview of how escrow accounts work in an EB-5 investment:

1. Agreement: The EB-5 investor and the EB-5 fund agree to escrow terms.
2. Deposit: The investor then deposits their capital into the escrow account.
3. Terms Fulfillment: The escrow release conditions are met over time.
4. Release of Funds: Once all conditions are satisfied, the capital is released to the EB-5 fund.

The Critical Role of Escrow in EB-5 Investments

The primary benefit of escrow accounts for EB-5 investors is the security they provide against potential misuse of funds. Knowing that an escrow agent is involved gives investors a sense of confidence that the project will adhere to EB-5 program criteria.

For EB-5 project sponsors, an escrow arrangement showcases the sponsor’s credibility, fostering trust among potential investors. In addition, project sponsors are assured that funds will be appropriately released upon the fulfillment of the compliance criteria.

Common EB-5 Escrow Release Conditions:

1. Form I-956, Application for Regional Center Designation, for the regional center has been submitted to USCIS.
2. Form I-956F, Application for Approval of an Investment in a Commercial Enterprise, for the offering has been filed by the regional center.
3. Form I-526E, Immigrant Petition by Regional Center Investor, for the EB-5 investor has been submitted to USCIS.
4. A minimum of $800,000 has been subscribed for by the EB-5 investor in the EB-5 fund.

What Is Insured Cash Sweep (ICS)?

An Insured Cash Sweep (ICS) is a service that allows depositors to keep large sums of money in a single bank while still receiving full Federal Deposit Insurance Corporation (FDIC) insurance on their deposits, which would normally exceed the standard insurance limit of $250,000 per depositor per bank. This is achieved through a network of banks that participate in the ICS program.

When a customer deposits money into an ICS account, the funds are distributed in amounts below the FDIC’s insurance limit among various participating banks. This distribution ensures that all portions of the customer’s deposit are covered by FDIC insurance, even if the total deposit exceeds $250,000. Each bank issues a certificate of deposit for their portion of the funds, and the customer retains access to the full deposit through the original bank.

The original bank still manages the entire relationship with the depositor, providing regular consolidated statements and a single point of access for managing the funds. ICS is popular among individuals who need to maintain large balances and require full FDIC protection and liquidity.

The Importance of an ICS for EB-5 Escrow Accounts

With ICS, if an escrow account is holding $4 million in EB-5 investments from five EB-5 investors, it remains entirely FDIC insured. Alternatively, without ICS, only $250,000 of the $4 million is FDIC insured. In a catastrophic event like a bank failure, this could mean a loss of 94% of the EB-5 investors’ capital if their funds are held in an escrow account without ICS. Additionally, since the investment was not released from the escrow account to the job creating entity, investors would not be eligible to receive a Green Card.

About Customers Bank

Customers Bank is a prominent, U.S.-regulated, full-service bank with many accolades, including the following:

• Over $22 billion in assets
• Ranked as America’s 29th-best bank by Forbes in 2024
• Recognized as one of S&P Global’s “Top 50 Public Banks” in 2021
• Holds a four-star “Excellent” rating from Bauer Financial
• Listed among Fortune’s “100 Fastest-Growing Companies” in 2022

Customers Bank provides comprehensive EB-5 escrow services, bolstered by a deep understanding of the market and stringent due diligence to minimize investor risk. Having served as an escrow agent and banking partner for numerous EB-5 projects, with total fundraising running into the billions, Customers Bank offers an unmatched level of experience. All EB-5 escrow funds managed by Customers Bank are protected through ICS, ensuring each dollar of an $800,000 EB-5 investment is insured by the FDIC. Moreover, investors enjoy the convenience of wiring funds to just one escrow account.

Learn More About Escrow Accounts, ICS, and the EB-5 Program

For further guidance on how to navigate the EB-5 program and how to select a safe project, we invite you to schedule a free consultation with EB5AN.