How Does Source of Funds for EB-5 Work?

Example of EB-5 Source of Funds Information for a Family Gift
When filing an EB-5 investor petition (I-526 Petition), an investor must prove the money they are investing comes from a “legitimate source” and that the money was “obtained through lawful means.” An investor must also provide a clear path of the funds traced from some origination point to the point where the funds are transferred to the regional center or Company. The key theme to meet this requirement is documentation and the documentation requirements are extensive. This article describes a common fact pattern where money is gifted from parents and shows what information would be required to support the source of funds analysis. You can find out more about the EB-5 source of funds requirements by clicking here. You can find out more about the EB-5 requirements by clicking here.

Facts:
Applicant’s parents sold a business that they operated for 10 years for $10,000,000 in 2014. The funds are in a bank account in France in the name of both parents. The parents wish to help their French national son get a green card and have decided to gift the money to their son. The article summarizes a list of documents that would be needed for the Source of Funds and Path of Funds requirements. The source of funds documentation demonstrates that the funds were earned through lawful means and the path of funds documentation traces the transfer of funds from the Investor to the U.S. enterprise (Regional Center or Company).

Source of Funds

1. Personal Statement from Investor describing her employment history, education, salary history, title and job duties and include a family personal statement as money is family money. The point of this statement is to give the examiner a general overview of who they are dealing with. All facts included in the personal statement should be supported with documentation.
2. Resumes & Educational Credentials of Investor and person providing funds
3. Evidence of Legal Ownership of Company before Sale – Articles of Incorporation, Stock Holdings List, Company Tax Returns, Registration Certificates, Business Licenses, etc.
4. 3 years of Company Tax Returns (from final 3 years before Company was sold)
5. Signed and executed Purchase/Sale Agreement
6. Bank Statement showing Proceeds from Sale of company arriving gift giver’s personal bank account.
7. Signed Gift Letter to Investor verifying:
   1. Date of the gift
   2. Amount of the gift
   3. Relationship of parties
   4. Special conditions of gift (if any)
   5. Address of donors
8. Description of how the parents obtained the funds
9. Personal Tax Returns filed by Investor for the past 5 years
10. Personal Tax Returns of Parents for 5 Years

Path of Funds – Transfer of Funds to Investor

1. Gift giver’s Personal Bank Statement showing date of the funds transfer to Investor & funds being withdrawn
2. Wire Transfer Statement, stamped by the Bank, showing funds being wired to Investor personal Bank Account in the U.S. (The statement should include names and bank account numbers for all parties)
3. Investor’s Personal Bank Statement showing receipt of funds
4. Wire Transfer Order, stamped by the Bank, showing transfer of funds from Investor’s account to EB-5 Escrow Account or U.S. enterprise (Regional Center)
5. Investor’s Personal Bank Statement showing withdrawal of funds by Regional Center
6. Bank Statement of U.S. enterprise Regional Center confirming receipt of Investor’s investment funds
7. Signed subscription agreement from Regional Center if applicable
8. Acknowledgement from Regional Center or Company that money was transferred from Investor

One thing to keep in mind is the intrusive nature of the questions and it is well known that the U.S. Citizenship and Immigration Services (USCIS) focuses on this requirement. We often send this to clients when we ask for information. “We understand that some of the information requested may seem intrusive, however, USCIS has extremely strict requirements for source of funds documents and the best way to ensure success is to make sure we provide all the information they require. Please feel free to reach out with any questions or concerns.”