For investors and entrepreneurs considering whether to apply for an E-2 investor visa, understanding the rules and regulations governing the source of funds may be challenging, and establishing a clear source of the E-2 investment funds is a key determination of any successful E-2 case.  In this post, we will explore the rules governing the source of funds and discuss how an E-2 applicant can meet the source of funds requirement.


For more information on the requirements of an E-2 visa, click here.


What is the source of funds requirement?

In order to qualify for an E-2 visa, the investor must demonstrate that he/she possesses and controls the capital invested. Moreover, the investor must explain where the money came from and show that the money came from a legitimate source. This requirement was imposed as the Government wants to make sure that the money does not come from criminal activity.  While at first glance this may seem like a straight forward requirement, it is often one of the most onerous E-2 requirements and this is especially the case if the filing is done with USCIS.

How do you show source of funds?

Demonstrating a legitimate source of funds is accomplished through documentary evidence and the evidence that is needed will depend on where the money came from.  For example, investment funds can come from personal savings, the sale of property, gift, loan, inheritance, insurance settlement and other legal means and all of these methods will require different information.  Some of the evidence you may submit to demonstrate the source of the investment funds include the following:

Source Types of Evidence & Comments
From personal savings from income (e.g. wages) over time. Tax Returns and Pay Records: Savings accumulated through lawful earnings are a common source of E-2 investment funds. We typically ask for personal tax returns for the past three years demonstrating sufficient earnings to account for the investment funds.

Generally 3 years of tax returns are provided but less could be submitted if the earnings are substantial in one or two years.

In some cases, an examiner may also ask for additional evidence to support where the income in the tax return came from (e.g. an employment letter or pay stubs).  This is not that common but we have seen this.

An examiner may also want to see Bank Statements showing the deposit and accumulation of funds over time.  This is usually accompanied with evidence (e.g. pay stubs) showing the origin of the deposits.  Increasingly, USCIS has asked for proof showing the accumulation of funds over time.

 

Loan If the loan is from a bank or another similar institution, then documents (e.g. The promissory note or loan agreements) supporting the loan along with bank transfer documents would be submitted.

If the loan is from another person, then an assessment would have to be made of where that person obtained the funds.  Once you determine where the funds came from, the person giving the loan must provide the same information that an investor would have to provide if the money were to come from the investor.

You must also show documents (usually bank statements) of the loan being transferred from the third party to the business bank account.

Loans secured against the company or company assets cannot be counted towards the E-2 investment.

Gift A gift letter describing the gift and the relationship of the person to the investor

The person giving the gift must provide the same information that an investor would have to provide if the money were to come from the investor.

Sale of Property (e.g. a Home) Documents showing investor owned the property (e.g. Deed)

Documents showing the sale transaction and bank and other records showing the recording of the sale.

If the property was recently purchased, the government may request information supporting where the money came from to buy the property.

Insurance or Court Settlement Court documents showing judgement and/or insurance documents showing entitlement.

Bank transfer documents.

Inheritance Probate documents and funds transfer documents.
Company Profits – e.g. Investor Owns Company If the source of investment funds come from profits of a business, corporate financial documents (e.g. audited financial statements) or corporate tax returns demonstrating the legitimacy and profitability of the business.

Documents showing how and why the funds were distributed from the company to the investor (e.g. Loan, gift, salary, dividends).

 

The key theme to the source of funds requirement is producing enough documentary evidence to provide a clear snapshot of how the funds were earned and who earned the money. The applicant must provide a clear paper trail of the funds from origin to the U.S. bank account.  In addition, if filing with USCIS or certain Consulates, all documents must be translated to English and this can make the task even more daunting. It is not uncommon to have the source of funds section of a complicated USCIS filing exceed 100 pages.  Finally, the U.S. government has little sympathy for the difficulty associated with obtaining documentation and generally takes the position (especially a USCIS filing) that if you cannot provide the information, it does not exist.


For more practical information and legal advice on immigration issues contact Scott Legal, P.C. Call 212-223-2964 or email info@legalservicesincorporated.com for a consultation.

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Jose G. Rivera, Esq. is an Associate Attorney at Scott Legal, P.C. He can be reached at 212-223-2964 or by email at info@legalservicesincorporated.com.


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