By Anayat Durrani
For foreign investors with the necessary capital, a path to permanent resident status in the U.S. can be obtained through the EB-5 program. Vietnam is among the top countries, after China and India, where the EB-5 program is popular. One area that has sometimes been an issue for Vietnamese investors, particularly with the higher investment amounts, is remittance. There have been challenges in transferring investment funds from Vietnam to the U.S. because of currency exchange and transfer restrictions.
“While Vietnam has always been one of the biggest EB-5 markets, it’s well-understood that there are a number of banking and currency restrictions that have to be carefully navigated,” says Phuong Le, partner, KLD LLP.
The country’s legislation regulates the export of Vietnamese currency abroad. Investors typically transfer funds via credit institutions and are required to show evidence of deposits for their EB-5 petition. An affidavit is required by a credit institution that indicates the funds were transferred from the Vietnam investor to the EB-5 investment in the U.S.
Jennifer Hermansky, shareholder, Greenberg Traurig, LLP, says investors should always discuss options with their local advisors in Vietnam. She says that many investors have been able to use currency transfer agents in Singapore and Australia, or family members to help transfer funds.
“It is very important for the EB-5 petition to contain a clear trace of funds and clear explanation of the transfer methods,” says Hermansky. “USCIS must be able to determine that the same funds that were lawfully sourced are the same funds transferred to the U.S.”
Challenges and solutions for Vietnamese EB-5 fund transfers
Brennan Sim, Global Sales for EB5 United, says transferring funds from Vietnam for their projects has been challenging. They have had difficulties in wiring money directly to project escrow accounts.
“To overcome this, we have found that the most effective solution is to set up bank accounts in the U.S. for our investors,” says Sim. “This way, investors can wire funds to the U.S. account and then transfer them to the project escrow account. This approach has been successful in streamlining the transfer process and ensuring that funds reach their intended destination.”
Le says when working with their investors, the three problems they encounter center on liquidity, currency restrictions and an ongoing anti-corruption campaign. He says Vietnam is currently involved in an anti-corruption purge where politicians to entrepreneurs are imprisoned and stripped of assets, which has caused an urgency among some to flee.
“Although real estate had been sky high, what we see now is difficulty in applying for loans to sell a house or fund an EB-5 investment,” says Le. “We see rates creeping north of 14% or 16%. This chokes off the ability for a lot of people to easily sell a home or borrow enough funds to make an $800K+ investment.”
He says they can’t transfer funds out due to banks tightening up transfers because of “increased regulatory scrutiny due to the anti-corruption purge and KYC/compliance issues.”
Le says their firm has been working on several solutions, including US-based lending services with their Regional Center partners and clients to overcome any issues.
Impact of RIA on EB-5 investments
The EB-5 Reform and Integrity Act of 2002, that was passed in March 2022, brought with it several changes to the EB-5 visa program.
“Under the RIA, the issue of path of funds and transfer of funds is front and center—it clearly states that an investor must identify the people involved who are responsible for transferring or exchanging an investor’s funds,” says Le.
Hermansky says the RIA requires all third parties assisting in the transfer of funds be identified and that new forms from the USCIS also have that requirement.
“USCIS has been more strict when reviewing currency transfer methods,” says Hermansky. “It is very important for the EB-5 petition to contain a clear trace of funds and a clear explanation of the transfer methods so USCIS can evaluate the same lawfully earned funds were transferred to the U.S.”
While the RIA has created more hurdles in the EB-5 process, Sim says it has not appeared to make an impact on foreign wire transfers.
“Wiring issues have stemmed primarily from foreign government restrictions,” says Sim.
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