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EB-5 market (by far the largest pool of EB-5 investors in the
Middle East) and contemporaneously shortened OFAC license
processing times for Syrian investors. Estimating OFAC processing times for specific licenses was and is never an exact science;
average processing hovers around four months and could exceed
12 months. This extended EB-5 process created investor fatigue
and in some instances delayed EB-5 projects.
While the requirement of no specific OFAC license has
removed a layer of bureaucracy for Iranian EB-5 investors, practitioners should still pay close attention to OFAC as the regulations and exemptions are continually being revised. Transfers
must still adhere to both section 560 and the rules pertaining
to Specially Designated Nationals. Syrians still need a specific
license, and with a lot of “old money” leaving the Middle East,
running SDN checks on all Middle Eastern investors and their
source of funds should be the first action taken by a practitioner.
As the market develops, Regional Centers should also do their
due diligence if making referral fee payments to Middle Eastern
agents, as OFAC infractions carry both severe financial and
criminal penalties. It would be prudent to implement OFAC
compliance measures when dealing with any EB-5 investor,
especially Middle Eastern and South American investors.
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With capital export restrictions in most non-gulf Arab
states and Iran, getting investor
funds to the United States can
be a challenge. In addition, EB-5
petitions require a clearly documented
money trail from the investor to the new
commercial enterprise. Practitioners must be
careful not to advise investors on how to break
capital export restrictions (methods of transfer), and at
the same time, should make them aware of the documentation
required to support the investor’s petition. Advice limited to
types of documents needed, rather than the method of transfer,
should be sufficient for investors to make a successful transfer
and obtain adequate evidence of their money trail.
“This centuries old alternative banking
system, or network, allows for the transfer
of value without the actual movement of
money across borders (not too different
from traditional banking where digits on
one computer move to another).”
In most cases, investors will be utilizing hawala (or “sarrafi”
in Iran) to make the transfer to the United States. This centuries
old alternative banking system, or network, allows for the
transfer of value without the actual movement of money across
borders (not too different from traditional banking where digits
on one computer move to another). The transactions made
within the hawala network are based completely on the honor
system and the reputation of hawala brokers. However, since
this does not happen through regulated banking channels, there
are many questions surrounding the legality of hawala due to its
E B 5 I n v e s to r s M ag a z i n e