EB-5 VISA: A SOLUTION IN THE AGE OF AI, TARIFFS AND DEPORTATIONS— BY TONY WONG
potential violations of foreign currency control regulations to challenge the lawful source of funds in EB-5 petitions and has not articulated a clear legal basis for concluding that an alleged breach of foreign currency control regulations in the investor’ s home country would, by itself, render the investor’ s funds unlawfully obtained.
In its RFEs, USCIS has repeatedly stated that“ the requirements and workings of foreign law are a question of fact, which must be proven by the petitioner.” This position derives from the precedent decision Matter of Hsiung. Consequently, the burden of proof falls squarely on EB-5 petitioners to demonstrate that the use of swap transfers or other alternative remittance methods does not violate the foreign exchange control laws of their home countries. Failure to provide sufficient evidence on this point may result in prolonged adjudication, issuance of NOIDs, or even denials.
STRATEGIES FOR RESPONDING TO USCIS CHALLENGES ON SWAP TRANSFERS In addressing this issue, the first question is whether the use of a swap transfer constitutes a violation of the lawful source of funds requirement— particularly in cases where USCIS does not challenge the source of funds of the third-party exchanger.
Under the governing regulations, specifically 8 C. F. R. § 204.6( e) and § 204.6( j)( 3), EB-5 petitioners are required to demonstrate only that the investment funds were obtained lawfully. There is no regulatory requirement to prove the legality of every subsequent transaction by unrelated third parties when those funds are transferred abroad.
The only statutory basis USCIS could arguably rely upon is the definition of“ capital” under 8 C. F. R. § 204.6( e), which excludes“ assets acquired, directly or indirectly, by unlawful means( such as criminal activities).”
Unless USCIS alleges explicitly that the investor’ s funds were derived from illegal activities, the mere use of a swap transfer should not, by itself, invalidate an EB-5 petition
As such, USCIS has not asserted that funds remitted to the United States via swap transfers were unlawfully obtained. Instead, the agency appears to be focusing on broader concerns about foreign currency control compliance and the perceived risks associated with IVTS rather than invoking the regulatory definition of“ capital.”
Facing this new line of scrutiny from USCIS, EB-5 petitioners and their attorneys may consider advancing arguments from the following three perspectives:
1. Clarifying the Lawful Source Standard Under 8 C. F. R. § 204.6( j)( 3), the petitioner’ s burden is limited to demonstrating that their own investment funds were obtained through lawful means. USCIS’ s reliance on the definition of“ capital” under 8 C. F. R. § 204.6( e)— which excludes assets“ acquired, directly or indirectly, by unlawful means”— is arguably misplaced when the agency has not alleged that funds obtained via swap transfers were illegally sourced. Petitioners can argue that the definition of“ capital” should be applied narrowly and not extended to impose additional evidentiary burdens not contemplated by the regulations.
2. No per se prohibition on swap transfers Unless USCIS alleges explicitly that the investor’ s funds were derived from illegal activities, the mere use of a swap transfer should not, by itself, invalidate an EB-5 petition. In fact, the instructions for Form I-526E expressly acknowledge the possibility of using third-party exchangers, such as hawala networks, for transferring investment funds. This recognition undercuts any claim that swap transfers are inherently impermissible under the EB-5 program.
3. Submitting an opinion letter from a qualified foreign legal expert EB-5 investors may also strengthen their response by submitting an opinion letter from a licensed attorney in the investor’ s home country. Such an opinion can analyze whether the swap transfer transactions at issue do not violate the relevant foreign currency control regulations, particularly in cases where the local currency transferred by the petitioner never actually leaves the country. Under Castillo v. Barr, 980 F. 3d 1278, 1284( 9th Cir. 2020), USCIS must give“ due regard” to expert testimony, as such testimony constitutes evidence capable of supporting the petitioner’ s factual position. Accordingly, a well-drafted foreign legal opinion can be a persuasive tool in rebutting RFEs or NOIDs raising concerns about foreign currency control compliance.
APPROACHES MUST BE STRATEGIC Swap transfers have become a more common mechanism for EB-5 investors from countries with strict foreign currency controls, such as China, India, and Vietnam. However, their use introduces complex legal and evidentiary challenges during EB-5 adjudications. By adopting a strategic, evidence-driven approach, petitioners can mitigate risks and strengthen their EB-5 cases despite USCIS’ s heightened scrutiny.
TONY WONG
Tony W. Wong is the founder and Managing Partner of Wong & Associates Lawyers P. C., offering immigration law services, with a particular emphasis on investment, corporate governance, business transactions, asset protection, intellectual property, and civil litigation.
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