WHAT ANTI-MONEY LAUNDERING EFFORTS MEAN TO EB-5 ATTORNEYS
— BY NATALIA POLUKHTIN
Attorneys must now take extra precautions in advising clients on financial and corporate structures
the misuse of professional service providers . This document , based on the reports of the intelligence services and law enforcement , indicates several problematic issues that may be detected by an EB-5 attorney with proper KYC protocols in place . For example , a source and mode of delivery of the payment of legal fees may alert several AML issues . If the amount of investment capital or funds used to pay legal fees appears inconsistent with the client ’ s financial history or stated income , further investigation may be necessary not just to present an approvable case for immigration services but also to absolve a lawyer from professional liability . Unconventional delivery of the funds to either the lawyer or the investment enterprise in the US may be a red flag . Large amounts of cash , wires from unidentified sources , cryptocurrency swaps , and chains of transactions between offshore companies may warrant more detailed inquiry .
Once necessary protocols are implemented , these new regulations may lengthen the EB-5 process for clients , requiring them to gather more extensive financial records and provide greater transparency into their personal and business dealings . However , by working closely with their legal counsel and following strict compliance protocols , they can reduce the risk of legal issues and ensure a smoother path to U . S . residency . Thus , it may be more important than ever to set the right expectations for the clients just embarking on an EB-5 process , rather than wait for a burdensome Request for Evidence probing into AML violations .
EB-5 Investors and Attorneys Can Help Advance Transparency and Financial Responsibility
In summary , recent amendments to the Rules of Professional Conduct create significant new risks for lawyers and additional obligations for EB-5 investors , centered around greater transparency and financial accountability .
Attorneys must now take extra precautions in advising clients on financial and corporate structures while ensuring that their clients fully understand the new obligations and possible legal consequences of underdocumenting their source and trace of funds . Additionally , lawyers must maintain thorough documentation and potentially involve compliance specialists to mitigate risks associated with personal liability for money laundering or fraudulent activities of their clients .
NATALIA POLUKHTIN
Natalia Polukhtin is the founder and principal of Global Practice , focusing on investment immigrant and non-immigrant visa categories . Originally from Russia , she earned degrees from Moscow State University and a law degree from Mercer University . Polukhtin has expertise in documenting sources of funds from CIS countries and has published articles on integrating cryptocurrency into the EB-5 process . She has received multiple awards , including recognition as a Top 25 EB-5 Attorney and from IIUSA . Additionally , she serves on the Executive Council of the Immigration Law Section of the State Bar and authored a guide on U . S . business immigration in Russian .
SOURCES
i
PL 117-103 , Part 2 ,( L )( ii )( III ) (“ Source of Funds ”) ii
FATF UNITED STATES ’ MEASURES TO COMBAT MONEY LAUNDERING AND TERRORIST FINANCING ( 2016 ), https :// www . fatf-gafi . org / en / publications / Mutualevaluations / Mer-united-states-2016 . html . iii
MLR 17 prescribes using “ Client Due Diligence ” form that classifies recipients of legal services by the degree of “ risk of money laundering and support of terrorism .” Banks and publicly listed companies call for simplified due diligence as “ low risk .” Private companies and individuals are listed in the Regulations as “ standard risk .” The heightened scrutiny is prescribed for the entities registered or operating in “ high-risk third countries ,” politically-exposed persons , and when the transaction is unusually large or has no apparent economic reason . See MLR 2017 , Reg . 33,37 . iv
See e . g . United States v . Wise , SI 23 Cr . 73 ( MKV ), ( S . D . N . Y . Apr . 25 , 2023 ); United States v . Ravenell , 66 F . 4th 472 ( 4th Cir . 2023 ); v
8 C . F . R . § 204.6 ( e ) vi
MR 1.16 , Comm . 2 vii
See OFFICE OF FOREIGN ASSETS CONTROL , SPECIALLY DESIGNATED NATIONALS AND BLOCKED PERSONS LIST ( SDN ) HUMAN READABLE LISTS ( last updated Apr . 27 , 2023 ), https :// ofac . treasury . gov / speciallydesignated-nationals-and-blocked-persons-list-sdn-humanreadable-list ; last accessed Oct . 10 , 2023 viii
See NATIONAL MONEY LAUNDERING RISK-ASSESMENT , https :// home . treasury . gov / system / files / 136 / 2022-National-Money-Laundering- Risk-Assessment . pdf ; last accessed Oct . 10 , 2023
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