Because of the strict international fund transfer limits Chinese EB-5 investors are subject to, currency swaps are generally the most efficient transfer method for moving EB-5 investment funds to the United States. A currency swap involves transferring an amount in the local currency to a third party. The third party then transfers the equivalent amount in U.S. dollars to an escrow account in the United States. Investors have three options when it comes to a currency swap: swapping with a third part known to them, with a licensed money exchanger, and with a third party who is unknown to them and not licensed as a money exchanger.
The most important consideration in transferring funds is that the transfer is handled legally and in such a way that compliance can be easily demonstrated to United States Citizenship and Immigration Services (USCIS). Since 2016, USCIS began to issue more requests for evidence (RFEs) related to source-of-funds documentation for intermediaries. USCIS expects intermediaries to prove that the amount in U.S. dollars they provide in exchange for the local currency was lawfully obtained. Additionally, the investor must prove that the exchange amount in the local currency was lawfully obtained.
The licensing process for money exchangers is rigorous, so USCIS usually accepts the company’s valid license as evidence that the company obtained its funds legally. A friend or family member—a third party known to the investor—may need to provide bank statements, employment records, and tax returns. Proving the source of funds of a third party, unlicensed money exchanger is infinitely more complex.
To best understand the legal options available and to ensure every transaction is handled and documented properly, a Chinese EB-5 investor should retain EB-5 immigration counsel before transferring funds. The investor should retain counsel who has previously worked with Chinese EB-5 investors and who understands the unique requirements of currency exchange from China.