What Is a Top Reason for EB-5 Denials?

The EB-5 Immigrant Investor Program is a popular pathway for foreign investors seeking U.S. permanent residency. However, not all EB-5 applications are approved, and a top reason for denials is issues related to the source of funds. The U.S. government requires strict documentation to prove that the investment capital comes from a lawful source, and failure to meet these requirements can result in denial.

One of the core EB-5 requirements is demonstrating that the investment capital was obtained lawfully and that the funds were properly transferred into the EB-5 investment. While this may sound straightforward, U.S. Citizenship and Immigration Services (USCIS) applies an extremely high level of scrutiny to source-of-funds documentation.

Applicants must prove not only how they earned the investment funds but also track the movement of those funds through bank accounts, wire transfers, and other financial transactions. Any gaps, inconsistencies, or missing documentation in this paper trail can raise red flags and result in a denial.

Here are some of the most common reasons EB-5 investors struggle with the source-of-funds requirement:

1. Insufficient Documentation: USCIS requires extensive financial records, including tax returns, pay stubs, business financials, loan agreements, property sale records, and more. Many investors fail to provide a complete and well-documented history of their funds.
2. Unverifiable or Untraceable Transactions: Funds that have passed through multiple accounts or third parties without a clear record of transfers may raise concerns about money laundering or other illicit activities. Investments that do not generate documentation regarding transactions (such as cryptocurrency) could also raise concerns. USCIS requires a clear and transparent paper trail from the original source of funds to the EB-5 investment.
3. Undocumented Gifts or Loans: Many EB-5 investors use gifted funds from family members or loans to meet the investment requirement. However, gifts and loans must be clearly documented with legal agreements, bank statements, and evidence that the donor or lender acquired the money lawfully.
4. Lack of Proper Tax Filings: Investors who have not properly reported income or paid taxes on their earnings may face difficulties proving their funds were obtained legally. USCIS often requires tax returns covering several years to ensure compliance.
5. Foreign Banking and Currency Exchange Issues: Investors from countries with strict banking regulations or currency controls may struggle to show a transparent transfer of funds. If the funds moved through multiple international accounts, USCIS may request additional proof to verify that each transfer was legitimate.

To minimize the risk of an EB-5 denial, investors should take the following steps:

• Work with an experienced immigration attorney to ensure all financial documentation meets USCIS requirements.
• Gather and organize comprehensive documentation showing how the investment funds were earned, transferred, and lawfully obtained.
• Provide clear records of any gifted or loaned funds, including legal agreements and tax records from the donor or lender.
• Maintain a detailed paper trail for all financial transactions leading to the EB-5 investment.
• Ensure tax compliance by providing properly filed tax returns that align with the claimed source of funds.

While the EB-5 visa program is an attractive path to a U.S. green card, issues with proving the lawful source of funds remain a top reason for denials. The government scrutinizes every aspect of the financial background of investors, making it crucial to submit clear, well-documented evidence. To increase the chances of approval, EB-5 applicants should work with a qualified immigration attorney and carefully prepare all financial records before submitting their application.

If you need guidance on your EB-5 investment and source-of-funds documentation, schedule a consultation with our immigration law team to ensure your application meets all legal requirements.