EB5 Investors Magazine Volume 2 Issue 2 | Page 8

A Report on Source of Funds: Perils of the Administrative Fee by Catharine Yen and Christian Triantaphyllis Because of the stringent requirements of the EB-5 program, documenting the source of funds used for an EB-5 investor’s investment can be a challenging task. An investor must not only prove that he has the funds to make the investment, but he must also prove that those funds came from legal sources. Therefore, the goal is to thoroughly and credibly document the investor’s source of funds to the satisfaction of the USCIS officer. When analyzing source of funds documentation, the officer follows the preponderance of the evidence standard, which means determining that it is “more likely than not” that the claims in the immigrant petition are true. 6 The process of demonstrating an investor’s lawful source of funds is complex, as the investment often consists of merging funds from various bank accounts, salaries, and real estate sales that add up to the total EB-5 investment. For this reason, once the investor has accumulated his investment amount into one account, a one lump-sum wire transfer of the capital contribution, rather than multiple wire transfers of smaller amounts from multiple bank accounts, can oftentimes be more straightforward from a paperwork standpoint when documenting source of funds. Nonetheless, it must be proven that all funds put toward an EB-5 investment have originated from lawful sources, whether invested in a lump sum or piecemeal. Along with the investment capital, investors also pay ancillary fees, including an administrative fee to the regional center handling the EB-5 investment, which may come under USCIS scrutiny. Though current EB-5 regulations do not extend the lawful source of funds requirement to the administrative fee, USCIS nonetheless requires such documentation. In this article, we will discuss the documentation that current EB-5 regulations require of the source of funds and actual USCIS practices. Based on USCIS-issued requests for further evidence, it is clear that USCIS is analyzing the source of administrative fees irrespective of what the regulations say. As such, this article will trace the implications and offer practice tips for professionals operating in the field. E B 5 I n v e s to r s M ag a z i n e