Article 2 of the “Detailed Rules for the Implementation of the Measures for the Administration of Individual Foreign Exchange,” places restrictions on the amount of Chinese Yuan Renminbi that Chinese nationals may convert into foreign currency annually. As the limitation is set at $50,000 per person every year, it has become common in China to transfer funds abroad through the use of friends and family. Specifically, to facilitate the transfer of funds abroad the EB-5 investor will often enlist the assistance of ten individuals. The investor’s burden of proof in tracing will require that they:
- Trace each transaction to 10 friends and family members
- Trace each transaction from their 10 friends and family members to their overseas account (most often in Hong Kong)
- Trace the funds from the investor’s overseas account to the Regional Center
To meet each prong of the trace it is critical for investors to obtain bank statements showing the transfers between their various accounts. If the transfer was made through the use of a currency exchange service, receipts are necessary. In addition it is often helpful for investors to obtain statements from the individuals that assisted them in transferring their funds to paint a clear picture to the USCIS of the movement of the funds.
Another variation that we sometimes see in EB-5 practice is for individuals to locate one or more individuals with both foreign and Chinese accounts. The EB-5 investor will transfer the equivalent of $500,000 or $1,000,000 towards the EB-5 investment in RMB to the individual’s Chinese account. In exchange, the individual will transfer either $500,000 or $1,000,000 to the EB-5 investor’s foreign account. From there, the investor transfers their funds to the account of the Regional center affiliated new commercial enterprise or a designated escrow account.
Individuals interested in investing in the EB-5 visa program should consult with local Chinese counsel to determine the optimal way to transfer funds out of the country within the current legal framework.