the investor without consent for such exposure . These challenges are already reflected in the current adjudication trends .
Some countries , such as Vietnam , have laws that severely restrict conversion of local currency into U . S . dollars or foreign transfers , causing many investors to find alternative means to transfer funds to the U . S . as part of the immigration process . However , recently many practitioners reported a trend of USCIS issuing burdensome Requests for Evidence ( RFE ) and disproportionally high denial rate for the cases of investors who had to use cryptocurrency or third parties to make the investment 5 . This abrupt departure from the practice of adjudicating such cases without questioning legitimacy of the funds delivered by a third party is obviously undermining the confidence of the investors considering participation in EB-5 program and sparks litigation on behalf of the investors already in the process .
activities )” from the permissible source of capital . 2 However , among other key elements of the EB-5 program , RIA modified the requirements for the documentation of Source of Funds ( SOF ).
In particular , the law now requires business and tax records or similar records to be filed with form I-526 , including tax returns of any kind filed during the past seven years ( or another period determined by the DHS ) by or on behalf of the investor 3 - a departure from the prior regulatory requirement of five years . In addition , disclosure of the identity of all persons who transfer funds into the U . S . on the investor ’ s behalf is now required . 4 Under the new standard , gifts and loans now have a “ good faith requirement ” with reference to disqualification of funds from impermissible sources including illegal activity . Thus , lenders and donors ’ records are mandatory in the cases where third parties are involved .
SOURCE OF FUNDS CHALLENGES CAUSED BY THE NEW RIA
Changed requirements undeniably increase the evidentiary burden for the investors and their representing attorneys . Investors are now expected to obtain sensitive and sometimes confidential fiscal documents from the parties who are not even seeking any immigration benefit and who might have engaged into financial transaction with
Another obviously problematic jurisdiction in the current political environment is Russia . Evidence of wide-spread corruption among government officials , non-transparent tax system , and sanctioned banks and large corporations historically make Russia-originated capital one of the most difficult to document properly to satisfy a petitioner ’ s burden of proof . Now , even with perfectly legal capital , documentation of transfer and currency conversion into USD inevitably involves presentation of evidence pertinent to third party intermediaries or cryptocurrency swaps , since private individuals are restricted to exchange their funds into USD or wire them abroad . In the current reality , an explanation as to how capital was obtained in Russia and remitted to the new commercial enterprise requires not only an understanding of financial documents , but also an ability to navigate a rapidly changing political environment .
Additionally , the new requirement of the third-party identity disclosure ignores the inherent nature of the integral part of the global financial markets – cryptocurrency trade . Cryptocurrencies are stored in digital wallets that are essentially software or applications installed by users without traditional authentication attributions . Cryptocurrency transactions do not reflect name , account number or tax ID of the holder . According to the IRS , the U . S . government applies the same taxation guidelines to all cryptocurrency payments by and to U . S . persons
" The new requirement of the third-party identity disclosure ignores the inherent nature of the integral part of the global financial markets – cryptocurrency trade ."
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