Considerations for Central and Latin American Investors Contemplating Participation in EB-5 Program
The EB-5 Immigrant Investor Program is an excellent vehicle for investors with the requisite capital (either $500,000 or $1 million depending on where the destination project is located) to lawfully immigrate to the United States by supporting the U.S. economy through investment and job creation. While all EB-5 applicants must satisfy the same set of requirements, we have found that certain considerations may arise that are particular to the applicant’s geographic area of origin. This post will focus on things that investors from Central and Latin America should keep in mind when considering participation in the EB-5 Program.
Taking Care to be in Compliance with U.S. Immigration Law
As a threshold matter, before submitting an I-526 petition as an EB-5 applicant—and during the pendency of your petition once filed with USCIS—potential applicants will want to ensure that they do not run afoul of U.S. immigration law. Previous and ongoing violations of the immigration laws and regulations can present serious issues for investors who are otherwise qualified and who can otherwise satisfy the requirements of the EB-5 Program.
Prior to applying for conditional permanent residency through the EB-5 Program, which ultimately leads to the attainment of a “green card,” many potential investors frequently travel to the United States on a B-2 visitor or tourist visa. The B-2 visa is a common nonimmigrant visa that is intended for a temporary stay in the United States for the purpose of tourism, pleasure, or visitation. This includes coming to the United States on vacation, to visit friends or relatives, to participate in social events, and to seek medical treatment, amongst other purposes. The B-2 visa validity period varies by country, with a maximum validity of 10 years; it generally permits its holder to remain in the U.S. for up to 90 days. An important aspect of a B-2 visa is that its holder attests to having nonimmigrant intent—that is, the B-2 visa holder is stating that they do not intend to permanently immigrate to the United States, that they have no intention of abandoning their foreign residence and that they have ties to such residence abroad, that they have adequate financial arrangements to carry out the purpose of their visit to the United States, and that they intend to depart at the expiration of the granted period of stay.
Problems can arise, however, when an applicant’s conduct gives rise to a contrary inference. For example, a person’s travel history pattern in and out of the United States can be construed by a consular officer or a border official as indicative of de facto residence within the country, even if the applicant in fact has no such intention. A typical travel pattern that could present this predicament, for instance, is one where the individual is staying in the U.S. for all or most of their granted period of stay, to then leave the country for a few days or weeks, subsequently returning to the U.S. and again remaining for most of their granted period of stay. Done repetitively over time, an immigration official could reasonably conclude that the individual is not comporting with the terms of the visitor/tourist visa. To further complicate matters, if that individual were to also own property and assets in the U.S., say a car or a home, the cards could be stacked even more heavily against them, despite maintaining a residence and ties abroad. If found to have violated the immigration laws and regulations, the foreign national’s file would be notated, and this could impact future visa applications, including one through the EB-5 Program. Specifically, if the applicant were to apply and have their I-526 petition approved, when it comes time to process their immigrant visas, they risk the chance of being denied as a result of their previous violations. It is, therefore, imperative that you consult with an immigration attorney before undertaking any lengthy or repetitive travel to the United States, keeping in mind the concept of nonimmigrant intent described above.
The Implications of Foreign Exchange Restrictions
Some Latin American countries have imposed foreign exchange control regimes of varying levels of rigidity. The effect of these regimes is to either drastically restrict or eliminate entirely the amount of foreign currency a national may purchase—including U.S. dollars. For example, Argentina only recently lifted its currency controls, which were put into place four years ago, now allowing the Argentine peso to float on the open currency market. Also consider Venezuela, a country whose strict currency controls have given rise to several parallel U.S. dollar black markets, each with its own exchange rate.
It is crucial that an investor considering participation in the EB-5 Program first investigate the foreign exchange rules in place in their home country. Depending on the nature of the forex regime, some investors may have to remit their investment funds to the U.S. in installments over a period of time; still others may be prohibited from remitting the large $500,000 or $1 million investment amounts entirely. Please consult with a professional before committing to the EB-5 Program to ensure that you will lawfully be permitted to acquire and remit the necessary investment amounts in U.S. dollars.
Barriers to Access to Banking and Financial Institutions
The World Bank Global Financial Inclusion (Global Findex) database, last updated in 2014, provides in-depth data on how individuals save, borrow, and make payments throughout the world. One of the primary indicia used to evaluate a region’s financial inclusion is the percentage of a country’s population over the age of 15 that holds an account at a financial institution. In Western industrialized countries, like the United States, that figure is around 93 percent; that stands in stark contrast to figures represented by Central and Latin American countries, for which, on the whole, only roughly 39 percent of adults have a formal account. Specifically, only 39 percent of Mexico’s population over age 15 owns a bank account; 50 percent in Argentina; and 68 percent in Brazil.
There is a confluence of factors influencing these figures, but in Latin America the most commonly cited reasons for not having an account according to the study (after lacking sufficient funds) are that accounts are too expensive and that the individual lacks trust in the financial and banking systems.
While most potential EB-5 applicants are likely to have an account with a financial institution, these findings do present legitimate concerns from an EB-5 perspective. The crux of the I-526 petition, which is the form that is submitted to apply for a green card through the EB-5 Program, is the ability to demonstrate that the funds to be used for the EB-5 investment were lawfully obtained. Keeping in mind that the government agent adjudicating your petition is from the United States, it can quickly become increasingly difficult to demonstrate a lawful source of funds if there is an absence of bank accounts and financial records that clearly show how the money was obtained.
In these instances especially, it is indispensable that you apprise your immigration counsel of your banking practices and modes by which you have earned and stored your money. It is not sufficient to simply make the requisite capital investment and call it a day—rather, the I-526 process comports a stringent and scrutinizing review of how you obtained the funds used to invest in the EB-5 project. However, with proper planning and creative lawyering, it is still possible to participate in and be approved for the EB-5 Program, despite unconventional banking practices in your home country.
Leveraging an E-2 Treaty Investment for a Green Card through EB-5
Current processing times for an I-526 Petition for the EB-5 Program are currently around 14 months. If one of your priorities is to come to the United States as quickly as possible, you may wish to evaluate other avenues for doing so. The E-2 nonimmigrant investor visa is one such option, with the attractive benefit that you would not jeopardize your opportunity to participate in the EB-5 Program by doing so.
The E-2 visa is available to nationals of certain countries with which the United States maintains reciprocal treaties of commerce and navigation. Beneficiaries of an E-2 visa are permitted to enter and work in the United States based on an investment of a substantial amount of capital in a U.S. business. To qualify for E-2 classification, the treaty investor must also be coming to the United States for the purpose of developing and directing the investment enterprise, which means the individual must be an owner, executive, manager, or essential skilled worker with the business. The E-2 category requires a “substantial” investment of capital, which is typically evaluated in relation to the overall size and worth of the destination entity.
As is true for the B-2 visa, discussed above, the E-2 visa carries nonimmigrant intent, meaning that an E-2 visa holder cannot both be in the United States and simultaneously intend to file a green card petition for permanent residence. The filing of an I-526 petition to participate in the EB-5 Program would represent an intention to permanently remain in the United States. Thus, while the beneficiary of an E-2 visa may not apply for the EB-5 Program while in the United States, they are not precluded from doing so subsequent to their departure, provided that the capital investment in the E-2 enterprise meets all the requirements of the EB-5 Program. Specifically, an E-2 investor could leverage their current investment in the E-2 enterprise by increasing it to $500,000 or $1 million and then demonstrating that this capital investment will create at least 10 new jobs for U.S. workers. Of course, any investment for EB-5 purposes must be shown to have been obtained by lawful means, such as salary or business earnings, the sale of real estate or an asset, or mortgaging a property, to name a few common modes of obtaining the requisite capital. It is important to note that an EB-5 investment must be a personal or individual investment, and E-2 investments belonging to the company (rather than the individual investor) or earned through retained company earnings will not count towards the minimum capital investment requirements for the EB-5 green card.
Nonetheless, with advanced planning in coordination with your immigration attorney, preferably before the E-2 visa is solicited, it is certainly feasible for an E-2 investor to successfully make the transition to an EB-5 green card. With EB-5 processing times growing more and more lengthy, and given that an E-2 visa application may be adjudicated in as little as a week at a U.S. embassy or consulate, for investors with urgent needs to be physically present in the United States, the E-2 may present a desirable first step towards eventual lawful permanent residence.