Free EB-5 Project Evaluation

What Counts as “Lawful Funds” for the EB-5 Program?

One of the requirements of the EB-5 program is that an investor’s capital has been obtained through “legal sources.” What exactly does United States Citizenship and Immigration Services (USCIS) mean by “legal sources”? It’s important to know because EB-5 investors must document the lawful source of their funds on their I-526 petition.

What Documents Should EB-5 Investors Submit to Prove Source of Funds?

According to the USCIS website, a variety of documents are suitable as evidence of the lawful source of EB-5 funds. I-526 petitioners must submit the following documentation, where applicable:

  • Tax returns filed within the last five years for a corporation, partnership, or other entity
  • Personal tax returns filed within the last five years for income, a property, a franchise, or anything else
  • Registration records for a foreign business
  • Other documentation indicating the source of funds, such as documentation certifying the sale of an asset, inheritance papers, or documentation certifying the donation or gifting of the capital to the investor.
  • Certified copies of judgments of evidence of pending actions involving monetary judgments against the petitioner within the past 15 years, whether in the United States or abroad

In addition to proving the lawful source of funds, EB-5 investors are required to show the path of their capital to the new commercial enterprise (NCE). Examples of suitable documentation include wire transfer records and bank statements.

Documenting the lawful source of their EB-5 capital can be a time-consuming process for investors, depending on the sources of capital they choose. They may need to gather large amounts of documentation spanning several years.

Every EB-5 investor’s situation is different, and USCIS may require investors to submit more evidence than listed above, depending on their circumstances. Investors must discuss the matter with immigration counsel to ensure they don’t miss any essential documentation.

Examples of Suitable Source of Funds Documentation

Common examples of documents EB-5 investors may submit to prove the source of their EB-5 investments include the following:

  • To prove salary earnings, income tax returns, W-2s, contracts of employment, bank statements, and more
  • To prove the sale of a business, a business registration certificate; documentation of the sale of the business; documentation proving their ownership, directorship, or officership of the entity; an appraisal of the business from a certified accountant, and more
  • To prove investment earnings, documentation of investment accounts over the past three or more years, stock certificates, bank statements, and more
  • To prove the sale of property, the purchase and sale agreements, a certificate of ownership, a deed tax certificate, bank statements, a loan contract, and more
  • To prove a loan, bank statements, documentation showing the loan, asset appraisals, documentation showing the sources of the lender’s capital, and more

While these are the most common sources of EB-5 capital, EB-5 funds may also be sourced from inheritance, gifts, divorce income, lawsuit judgments, and more. If an investor receives EB-5 funds as a gift from parents, relatives, or friends, the donor must prove the lawful source of their funds for the gift.

Tips for Documenting the Source of Funds

Although collecting the required source of funds documentation can be time-consuming and cumbersome, EB-5 investors can take several steps to facilitate the process:

  • Consult an immigration attorney to determine which sources of funds are most appropriate to use and figure out what documentation to gather.
  • Store potential investment funds in a separate account to make tracking easier.
  • Start well in advance so they have time to have all their documents translated, if necessary.