Providing adequate evidence that EB-5 investment capital was legally obtained is one of the cornerstones of success in the Form I-526 petition process. The goal of proving the sources of EB-5 investment funds is to ensure that the money invested in the United States through the EB-5 program was obtained legally. To achieve this goal, United States Citizenship and Immigration Services (USCIS) has set several requirements related to demonstrating the lawful sources of investment funds.
Although this may seem simple enough, the complexity and variety of sources of funds has turned this into an obstacle for many petitioners. To avoid delays in I-526 petition processing caused by Requests for Evidence (RFEs), learn how source-of-funds documentation relates to the I-526 petition, what types of documentation USCIS accepts, and what level of proof is required. Finally, see how unique circumstances affect source-of-funds documentation in three case studies.
Proving the Sources of Funds in the I-526 Petition
The purpose of the I-526 petition is to show USCIS that the investor is complying with the requirements of the EB-5 program and thus qualifies for an EB-5 visa. Therefore, in addition to providing information about the investment amount, the investment being made in a new commercial enterprise (NCE), the fulfillment of the job-creation requirements, and the investor’s involvement in the NCE, the investor must document the source or sources of the investment funds and provide biographical information as part of the I-526 petition.
EB-5 investors can consider Form I-526 as a two-part petition: one part deals with the project documents and the other with the investor’s details, including proof of how the investment funds were obtained. For a successful application, both parts of the I-526 petition must adhere to USCIS standards. Failure to properly document the sources of funds will result in an RFE—or even outright denial.
Source-of-Funds Documentation and the Level of Proof Required
USCIS sets out the source-of-funds requirements for EB-5 investors in Volume 6 (Immigrants), Part G (Investors) of its Policy Manual, specifically in Chapter 2 (Eligibility Requirements). Section A(4) deals with the lawful source of funds:
The immigrant investor must demonstrate by a preponderance of the evidence that the capital invested, or actively in the process of being invested, in the new commercial enterprise was obtained through lawful means. […] In establishing that the capital was acquired through lawful means, the immigrant investor must provide evidence demonstrating the direct and indirect source of his or her investment capital.
USCIS does not provide a specific list of documents EB-5 investors can use as proof of sources of funds, probably because of the vast differences between individual investors’ circumstances. It does, however, stipulate that the investor must prove the funds were obtained through lawful means “by a preponderance of the evidence.” “Preponderance of the evidence” is an evidentiary standard that means, according to Cornell Law School’s Legal Information Institute, “the burden of proof is met when the party with the burden convinces the fact finder that there is a greater than 50% chance that the claim is true.” Therefore, if an EB-5 investor can prove with 51% certainty that funds were legally obtained, they meet the evidentiary standard required by USCIS.
While no set rules exist about EB-5 source-of-funds documentation, several case decisions provide further guidance on the documents to include with an I-526 petition. For example, in the USCIS Administrative Appeals Office’s (AAO) 1998 precedent decision, Matter of Ho, the AAO noted that the petitioner must “show that he was the legal owner of the invested capital. Bank statements and other financial documents do not meet this requirement if the documents show someone else as the legal owner of the capital.” Furthermore, the petitioner must demonstrate that the invested capital was acquired through lawful means: “Mere assertions about the petitioner’s financial situation or work history, without supporting documentary evidence, are not sufficient to meet this requirement.”
The AAO made a similar finding in the 1998 Matter of Soffici, noting that “a petitioner must present clear documentary evidence of the source of the funds that he invests. He must show that the funds are his own and that they were obtained through lawful means.” In this case, one of the reasons the petition was denied was that the petitioner failed to prove that the capital belonged to him. He listed funds held in several bank accounts as his personal assets, but he held joint bank accounts with his father. The letter from the bank and the bank statements submitted failed to clarify how much of the money in the accounts belonged to the petitioner. He further failed to adequately document the source of funds:
The petitioner claims that the first $450,000 came from personal savings and the sale of “a house.” The second $500,000 came from the sale of “our business.” No documentation, such as a sales contract or deed establishing ownership and price, has been submitted regarding the house or the business. […] Simply going on record without supporting documentary evidence is not sufficient for purposes of meeting the burden of proof in these proceedings.
Similarly, RFEs and Notices of Intent to Deny (NOIDs) can provide valuable guidance on the types of documents EB-5 investors can use to prove the lawful sources of funds.
Documenting the Path of EB-5 Investment Funds
Documenting the path of EB-5 investment capital is an important and often-overlooked aspect of providing EB-5 source-of-funds documentation. The path of funds simply refers to the movement of EB-5 capital from its origin to the point of investment—that is, from the source to the moment the funds reach the escrow account or the NCE’s business account. For example, if an EB-5 investor funds their investment with savings from salary, the path of funds would include evidence of the salary payments being deposited in the investor’s current account, individual amounts moving from the current account to the savings account, and the total investment amount being paid over to the NCE’s business account or the project escrow account.
Documents to Include as Proof of the Source and Path of EB-5 Investment Funds
While the process to document the lawful source of funds is unique for each EB-5 investor, all investors should include their personal income tax returns for the previous five years, if available. If tax returns are not available due to the particular tax system in their country of origin, investors should submit a declaration from a tax professional in their country of origin detailing the required information and explaining the lack of records. Additionally, they should include bank statements that show the deposit of the funds.
Furthermore, according to USCIS, the petitioner must “provide evidence demonstrating the direct and indirect source of his or her investment capital.” Thus, in the case of gifted funds, for example, the petitioner must prove that they received the amount as a lawful gift (direct source of capital) and that the gift giver obtained the funds in a lawful manner (indirect source of capital).
Because of the vast array of sources of funds, the documents to include with an I-526 petition can vary substantially. Investors can use the table below, which lists documents to include with common sources of funds, as a starting point.
|Source of Funds||Documents to Offer as Proof|
|Real estate sales|
EB-5 investors must also provide certified translations of non-English documents. To find the civil documents issued in an investor’s country of origin that are equivalent to U.S. civil documents, investors should check the State Department U.S. Visa: Reciprocity and Civil Documents by Country page.
The source of funds is usually described in the cover letter that accompanies the Form I-526 petition, with the supporting documents included as exhibits to the letter. For a clear example of how to present source-of-funds information and exhibits in this cover letter, download the EB5AN example I-526 source-of-funds cover letter section. The template shows how to present the source of funds that derive from a loan secured against real estate, with the loan funds provided by an individual rather than an organization.
EB-5 Source-of-Funds Case Studies
The case studies in this section illustrate EB-5 investors’ different requirements when it comes to documenting the sources of investment funds. These requirements not only depend on the actual source of the funds but also on factors such as the official language used in the country of origin and the investor’s current immigration status.
Investor 1: Ms. Amahle Dlamini, Entrepreneur, South Africa
Ms. Dlamini is an equity owner in an import/export business that started with $100,000 in start-up funding, of which she provided $25,000. Her primary source of income is profit distributions from the business, and she intends to use some of this income as her EB-5 investment capital.
The first step for Ms. Dlamini is proving that the initial $25,000 investment amount was obtained lawfully. Ms. Dlamini received this amount as a life insurance payout upon the death of her father. To prove the source of the funds, she needs to provide a copy of her father’s death certificate and the life insurance policy or the certificate of payment. To prove the path of the funds, she needs to include a personal bank statement showing the deposit of the policy payout, a personal bank statement showing the funds being paid over to the business, and a business bank statement showing the funds being received as business equity.
Next, Ms. Dlamini needs to provide an overview of the business and of her involvement in the business. To prove that the business exists and is in good standing, she can provide the following business documents: the operating agreement, the certificate of formation, and a tax certificate from the South African Revenue Services. The operating agreement can also act as documentary evidence of the services and/or products the business provides.
To confirm that the business engages in legal operations—and thus that the profit distributions derive from a legal source—and that it has paid all taxes due, Ms. Dlamini can provide a selection of client invoices for the preceding fiscal year, the business’s bank statements showing the corresponding payments (highlighted), the business’s audited financial statements for the preceding fiscal year, and the business’s tax returns for the preceding fiscal year.
These documents will include evidence of the profit distributions paid to the business owners. However, to match the dividend payments to the amounts that constitute the EB-5 investment, Ms. Dlamini should include her personal income tax documents showing the income received from the business, a letter from the business’s auditor confirming the dividend payments, and her personal bank statements for the periods in which she received dividend payments.
Finally, Ms. Dlamini should ensure that the documents clearly show the path of the EB-5 investment funds—moving from the business account to her personal account to the EB-5 investment account. Because South Africa uses English as an official language, Ms. Dlamini does not need to provide certified translations of her documents.
Investor 2: Dr. Fulano de Tal, M.D., United States
Dr. De Tal and his wife, both originally from Brazil, have been living in the United States for the last 10 years as the holders of H-1B visas. Because the H-1B is a dual intent visa that allows the holder to pursue permanent resident status, Dr. and Mrs. De Tal decided to save money from their earnings to invest in the EB-5 visa program.
To prove that his investment amount was lawfully obtained, Dr. De Tal needs to submit his employment contract and an income certificate from his employer to provide evidence of his salary payments. He further needs to include bank statements showing his salary payments and his income tax statements for the last 10 years. If they used Mrs. De Tal’s salary to cover their living expenses and saved most of Dr. De Tal’s salary, Mrs. De Tal needs to provide the same set of documents to prove that her income was lawfully obtained.
Again, because the source-of-funds documents derive from U.S. sources, they do not need to provide certified translations of the documents. However, they may need to have documents that prove their relationship to one another, such as their marriage certificate, translated.
They should also ensure that the documents they submit clearly show the path of the funds from the employer into Dr. De Tal’s bank account, to the savings account, to the escrow or NCE account.
Investor 3: Yusuf Yilmaz, Graduate School Candidate, Turkey
Mr. Yilmaz is planning to attend graduate school in the United States after recently completing his undergraduate degree at Hacettepe University. Although he has never earned money of his own, his parents have gifted him enough funds to cover the required EB-5 visa investment amount and any associated fees.
For Mr. Yilmaz, the first step is proving that the funds were a gift from his parents. He can do this by providing a letter from his parents that states the funds are a gift that Mr. Yilmaz doesn’t need to repay. He also needs to provide proof that he has paid any taxes due on the amount by providing a tax return or certificate from the Turkish Revenue Administration.
Additionally, Mr. Yilmaz’s parents need to prove that they obtained the legal funds lawfully. Both his parents are employed by large multinational corporations, and the gift amount is their savings for the last five years. Thus, Mr. Yilmaz has to provide the same documents—for both his parents—that an EB-5 investor whose funds stem from savings would need to provide: their employment contracts, income certificates from their employers to provide evidence of their salary payments, bank statements showing their salary payments, and their income tax statements for the last five years.
Because the official language of Turkey is Turkish, the documents provided have to be certified translations of the originals. This also applies to bank statements and the like—even though they consist largely of numbers, the USCIS adjudicators need to be able to see section titles such as “debit,” “credit,” and “total.”
Finally, to show the path of the funds, Mr. Yilmaz needs to show the funds leaving his parents’ savings account and being deposited in his account, before moving to the relevant escrow or NCE account. Furthermore, he needs to show the salary payments being deposited in his parents’ account and moved to their savings account.
Why Should You Work with EB-5 Professionals on I-526 Petition Preparation?
Proving that investment funds were legally obtained can be a complex process, with quirks specific to various countries. Working with immigration counsel that specializes in EB-5 and with an EB-5 practitioner who specializes in preparing I-526 petitions vastly simplifies the process. It’s especially important to work with someone who is familiar with the civil authorities and systems in your country of origin, as this can help avoid lengthy delays in document procurement. An experienced EB-5 professional can also help you to identify the source of funds with the simplest documentation process, which will further save you time and money.
To learn more about the EB-5 program and the I-526 petition, contact EB5 Affiliate Network today.