THE DEVIL IS IN THE DETAILS
When preparing an EB-5 Immigrant Investor Petition, the most important and meticulous drafting you and your immigration attorney will collaborate on is the Source of Funds portion of I-526 Petition by Alien Entrepreneur. The Source of Funds outline, usually in the form of an Affidavit or Investor Declaration by the investor, should provide a logical and well-documented explanation of how the money you intend to invest was acquired, in order to prove the lawful source of your EB-5 investment funds. This explanation needs to be detailed, tracing your invested funds from their original lawful source to the personal bank account used to transfer the investment funds. In today’s immigration environment, the devil is in the details and providing an irrefutable Source of Funds to USCIS will build a strong base for your EB-5 Petition and can help avoid frivolous Requests for Evidence on this topic.
Elements of a Strong Source of Funds for EB-5 Petition
First, it is essential to establish how the investment funds were originally earned.
In your EB-5 petition, it is necessary to establish that the funds you are investing were earned lawfully. This also applies to funds that were gifted to you, which requires you to show that the person gifting the funds earned them in a legal manner. There are as many ways to show the lawful origins of funds as there are ways to earn the funds in the first place, but for brevity’s sake, we will use the example of earned income.
Many EB-5 investors earn their investment monies through employment income. In these cases, the Source of Funds must demonstrate that the company or companies are legitimate businesses earning legal income.
The amount of documentation can vary greatly depending on the type of business we are dealing with. If you worked for a large or well-known corporation, it is fairly straightforward to show that the company is legitimate by providing promotional information, websites, SEC filings etc. Conversely, if you earned the income from a smaller or self-owned company, you will need to provide wide-ranging documentation such as incorporation documentation, company financials, website and promotional documents, tax returns, sampling of contracts, paid invoices and client lists. By building a profile of the company through these documents, we will show USCIS that the company was earning its income in a lawful manner.
The general principle of verifying the legality of the underlying source applies to all types of income: investment, real estate, dividends, gifts, loans, inheritance. It is imperative to work with an experienced EB-5 attorney to develop a clear and provable source of funds.
Next, trace how the investment funds were transferred into the account used for the EB-5 investment.
Once the statement of funds has established that you earned the money from a lawful source, you must show that this lawfully earned money was used for the EB-5 investment. For example, some investors are paid a salary into their personal account. Hypothetically, they then transfer this money to a savings account before finally moving it into a joint marital account, which is used to make the EB-5 investment. In order to assure USCIS that the investment funds were in fact earned legally, the evidence of the Source of Funds would include: Bank statements showing the deposit of the salary into the investor’s personal account, bank statements showing the transfer and deposit of the funds into the savings account, and finally bank statements showing the transfer and deposit of the funds into the joint marital account. By closely tracing the funds into the final account, the investor will establish that the funds used for the investment were in fact earned lawfully.
Understandably, these records are not available in all cases due to the age of the transfers, or other circumstances. In such cases, it is crucial to work closely with an experienced EB-5 attorney who will help you establish a solid path of funds and will suggest acceptable secondary evidence to prove this path.
Finally, ensure that you can trace the transfer of the funds invested from your bank account to the Regional Center.
Although the Regional Center will provide documents showing the transfer of money into their account, you should also be able to show where these funds were transferred from. In some cases, all of the investment funds are in a client’s personal bank account and a simple bank statement showing the funds being transferred out of this account will suffice. In other instances, clients use money from multiple accounts or need to transfer the money to the Regional Center in numerous small increments. It is important in these cases that we are able to provide wire transfer confirmations or bank statements showing both that the client owns the account from which the money was transferred, and showing the money being transferred out of said account.
In all, the Source of Funds can feel like a daunting and complex process. To a knowledgeable EB-5 attorney, however, it can be an intriguing and collaborative challenge which allows for inspired and resourceful investigation and drafting.
- Maged & Rost PC
- U.S. Citizenship and Immigration Services
- UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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