Recently, the U.S. Citizenship and Immigration Services (USCIS) held an EB-5 open interactive teleconference. This innovative teleconference was open to anyone interested in EB-5, including EB-5 practitioners and EB-5 applicants. The theme of this meeting was: Proof of Lawful Source of EB-5 Funds. WorldWay U.S. immigration experts have summarized the main points as follows:
Evidentiary Standards for Proving Lawful Source of Funds
Preponderance of the Evidence Standard: In the U.S. legal system, this is a relatively lenient burden of proof, far lower than the "clear and convincing" standard in general civil litigation. The USCIS EB-5 memorandum dated May 30, 2013, explains this standard as follows: "The applicant does not need to eliminate all doubts during the adjudication process. Even if the adjudicator has some doubts about the actual situation, as long as the applicant submits relevant, persuasive, and credible evidence that allows the adjudicator to conclude that it is 'more likely than not' or 'probably true,' the applicant has met the burden of proof." It can be seen that the adjudication standard for EB-5 applications is quite reasonable and not overly stringent; investors need not be overly nervous about proving the lawful source of funds.
Holistic Assessment Rule: This means that when adjudicating an EB-5 application, USCIS will make a judgment based on the "totality of the circumstances" of the submitted evidence, rather than relying too heavily on individual documents or information.
Evidentiary Weight / Document Value
Strongest: Government, tax, or bank records.
Medium: Statements/written affidavits provided by objective/independent third parties.
Weakest: Statements provided by the investor, the investor's friends/relatives, or the investor's company.
These pieces of evidence are considered the weakest because they are self-serving.
These pieces of evidence can be used to support or explain other documents, but cannot be used alone.
Using only self-serving statements without providing other documents will lead to a Request for Evidence (RFE).
Providing multiple sources of evidence for a certain part of the source of funds will enhance the evidentiary weight.
If Necessary Documents Are Missing
Explain the reasons for the missing documents in the client statement and cover letter.
The explanation should be as detailed as possible. Statements such as "unable to obtain documents" are insufficient. It is necessary to explain the reasons for the inability to obtain them and what efforts were made to attempt to obtain the documents.
If the reason for the missing documents is their age, USCIS is generally lenient, but a corresponding explanation must still be provided.
If the missing documents are very important and recent, one should attempt to obtain different explanations from multiple people (e.g., investor statement + friend/relative statement + bank letter, etc.).
In the case of missing documents, the corresponding explanation should be provided immediately, rather than waiting until an RFE is received.
Doing so can avoid unnecessary delays caused by an RFE.
Doing so can also test the acceptability of the explanation by USCIS.
Consider whether other evidence can be provided. For example, if the company where the investor was previously employed has ceased operations, evidence of the company's dissolution can be provided.
Translation of Documents
The investor's statement must be translated as clearly as possible, as USCIS will use this statement to understand the supporting explanations for other documents.
Path of Funds
The path of funds is just as important as the source of funds.
There must be no gaps in the evidence regarding the path, movement, and holding of funds.
In cases where multiple accounts are used, the path of funds becomes particularly important.
If EB-5 funds have been held in a bank account for a long time, the holding status of the funds will become a focus of attention.
For example, an investor sold a house in 2012 but did not use the proceeds for the EB-5 investment until 2014.
- It must be proven that the investor held the funds for 2 years (complete 2-year bank statements are required to prove that the funds have been kept in the same account).
For documents related to property sales or company loans/dividends, it is not enough to just provide bank statements showing large deposits. The investor should also provide additional evidence to prove that the money originated from the buyer or the company.
If the seller's bank account cannot show the connection between the property sale and the incoming funds, it is not enough to just provide the seller's bank account records showing large deposits.
Consistency
Consistency of documents is very important. Any inconsistency may lead to an RFE from USCIS, so all documents should be carefully checked for contradictions before submission. (Note: Whether documents are consistent and whether there are contradictions is an important basis for USCIS to make credibility judgments).
Inconsistencies in documents are more common in property pre-sale contracts, for example, when a property is purchased before completion. After completion, the property area may differ, and the property price and the money paid may therefore differ from the contract price.
If such a situation occurs, explain the inconsistency in the documents in the client statement and cover letter.
Failure to provide an explanation — RFE "USCIS requests additional evidence"
Evidence and Documents
Do not write explanations that have not appeared in the investor statement or other documents solely in the cover letter of the application package; the cover letter is only used to help USCIS understand the facts and is not evidence itself. Anything in the cover letter must be supported by other evidentiary documents.
Do not submit documents and information unrelated to the source of funds.
Doing so may confuse the immigration officer and lead to unnecessary RFEs.
Types of Source of Funds
Property Sale
- If the investor originally purchased the property with a mortgage, evidence showing the current status of the mortgage and whether it has been paid off must be provided.
- Information regarding the property sale proceeds/seller or buyer paying property transfer taxes should be provided.
Using Property as Collateral for a Bank Loan
- The property must be owned by the investor.
- If the property is owned by someone else, a gift agreement for the loan funds is required, and the source of the funds originally used to purchase the property must be provided.
In many cases, the property will be in the name of the investor's children.
- USCIS has not issued a clear policy stating whether such a situation is feasible. Sometimes USCIS will issue an RFE because of this, and sometimes it will not.
Company Shareholder Loan
- Must provide company information, recent corporate income tax filing records, documents of the investor's purchase of company shares or equity contributions, the source of funds for the purchase of shares/equity contributions, capital verification reports or audit reports, shareholder meeting documents, loan contracts, and fund transfer documents.
Bank Credit (e.g., unsecured) — Invalid
Borrowing from friends or relatives (rather than a bank)
- USCIS has not issued a policy stating whether it is necessary to prove the source of funds provided by friends. However, USCIS will release relevant guidance on this issue at a later date.
Administrative Fees
USCIS has finally confirmed that it is not necessary to explain the source of funds for administrative fees.
However, it must be possible to distinguish the administrative fees from the $500,000 investment.
"Silly" RFE — Incorrectly issued due to USCIS misunderstanding
If an RFE requests irrelevant documents or information, the investor should explain why the document or information is unnecessary.
However, if possible, it is always safe to submit as requested by the RFE.
If an RFE requests documents or information that have actually been submitted, the investor should state that the documents have been submitted and specify the exact attachment.
However, in any case, one can also resubmit as requested by the RFE to help the immigration officer.
USCIS continues to reserve the right to strictly require the provision of bank and tax documents for the last 5 years.
WorldWay, as a leading U.S. investment immigration institution, has three powerful documentation centers across the country. We strictly audit all client documents in accordance with the requirements of the EB-5 Act to ensure that every client's investment has a lawful source explanation and that all fund transfers comply with China's foreign exchange management regulations. Over the years, WorldWay has helped numerous Chinese families realize their dream of immigrating to the United States. Consultation Hotline 400-138-2929
