X 2b
M
3b
1 potential for use as a money laundering tool. Some have gone as far as to call the system“ financial terrorism.” This has obscured the reality of the system’ s practical and efficient uses. In some regions, hawala is the only method of transfer available and it would be inaccurate to label hawala brokers as financial terrorists. A World Bank report on hawala in Afghanistan praises the systems self-regulation and reported that over $ 200 million of transfers were made to Afghanistan from NGOs at the outset of the war with the Taliban, without which these organizations efforts would have been crippled. The U. S. Treasury has frequently stated hawala in itself is not illegal. In fact, without hawala there can be no EB-5 investors from Iran, or outward money transfers made for any purpose. The act of laundering money is not akin to the method or system of moving money; it is the intent of the parties involved that makes it money laundering. For EB-5 purposes, practitioners should view hawala in the same light as a wire transfer. Clients should be advised to obtain details of the value of funds being transferred, the originating bank, recipient bank and the facilitators in between. Such documentation is accepted by USCIS as supporting evidence for the lawful source of funds and money trail.
“ Practitioners should stay abreast of current affairs in the Middle East so they can collect supporting articles for gaps in the money trail, should they exist.”
Political instability is rarely lonely and is almost always accompanied by financial instability. Currency fluctuations in these new beacons of democracy, as well as those being affected by sanctions, has resulted in a rise in demand for both dollars and gold in the Middle East. Iran has certainly felt the sting of sanctions over the past 24 months. Its currency, the rial, has seen a 75 % drop in value against the U. S. dollar. Consequently, many investors have sought to hedge against further losses by buying dollars and gold. With government crackdowns on“ dollar hoarders,” most have resorted to storing large amounts of cash or gold in safe deposit boxes in their homes. This source of funds fiasco is a reality that EB-5 practitioners must face when dealing with Iranian investors. There are many news articles that document the economic instability in the region. Practitioners should stay abreast of current affairs in the Middle East so they can collect supporting articles for gaps in the money trail, should they exist. In the case of Iran, international news outlets have reported on the currency devaluation, government crackdown on hawala brokers and rush on the banks. As long as a reasonable legal nexus exists between the funds and the investor, then there exists a lawful source of funds.
A
2a
The figure shows how hawala works:( 1) A customer( A, left-hand side) approaches a hawala broker( X) in one city and gives a sum of money( red arrow) that is to be transferred to a recipient( B, right-hand side) in another, usually foreign, city. Along with the money, he usually specifies something like a password that will lead to the money being paid out( blue arrows).( 2b) The hawala broker X calls another hawala broker M in the recipient’ s city, and informs M about the agreed password, or gives other disposition instructions of the funds. Then, the intended recipient( B), who also has been informed by A about the password( 2a), now approaches M and tells him the agreed password( 3a). If the password is correct, then M releases the transferred sum to B( 3b), usually minus a small commission. X now basically owes M the money that M had paid out to B; thus M has to trust X’ s promise to settle the debt at a later date.
By the nature of the program, EB-5 investors hail from countries with some sort of instability, whether economic, political or social. There are no“ easy” EB-5s. The Arab Spring has turned the Middle East into a burgeoning new market for EB-5 stakeholders. Developing a channel for EB-5 investments from the Middle East will mitigate the inherent risk of relying on a single pool of investors. Growth opportunities for the EB-5 Program must come from responding to markets that show a demand for the EB-5 visa. Therefore, becoming familiar with the foreign export controls of the Middle East( the hawala financial system, U. S. sanctions and OFAC regulations) will ensure the success of EB-5 stakeholders as they respond to this growing demand and access the new market that is the Middle East.
Reza Rahbaran is the managing attorney at the Law Offices of Rahbaran & Associates. Reza’ s main area of practice is business immigration under the EB-5 Program and the related U. S. trade sanctions. He has advised Regional Centers on developing new projects that qualify for EB-5 investments in multiple industries, including the creation of new Regional Centers and existing Regional Centers. He has implemented internal compliance practices for Regional Centers that address ongoing immigration and sanctions regulations. He also advises foreign nationals on immigration under the EB-5 Regional Center Program with particular focus on countries that fall under U. S. trade sanctions regulations and currency restrictions. Reza has been featured regularly on television networks as an EB-5 and U. S. sanctions expert and has written articles on the sanctions and the EB-5 Program, as well as serving on the D. C. Bar faculty.
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