Understanding Fund Transfer Strategies for EB-5 Investors from China, India, and Vietnam

By Tony Wong 

In the context of international finance, the movement of funds across borders is often subject to stringent regulations, particularly regarding foreign currency control. This issue becomes particularly pertinent for EB-5 visa investors from countries such as China, India, and Vietnam, where laws governing the transfer of funds can vary significantly.  

A key concern arises when these investors consider utilizing third-party exchangers for their transactions. This practice raises questions about potential violations of local regulations and the legality of informal value transfer systems (IVTS). As these petitioners navigate the complexities of compliance, understanding the implications of their chosen methods for fund transfers is crucial for their EB-5 application. 

TRADITIONAL ISSUES OF SWAP TRANSFER 

Most EB-5 investors originate from China, India, and Vietnam, collectively accounting for approximately 88% of all EB-5 visas issued in Fiscal Year 2024, according to the data published by the U.S. Department of State. These three countries impose strict currency exchange or remittance controls that significantly restrict the movement of foreign currency into and out of their jurisdictions. As a result, EB-5 investors from these regions frequently face substantial challenges in transferring the required investment funds to the United States.  

In China, the State Administration of Foreign Exchange (SAFE) limits everyone to an annual remittance cap of $50,000. In India, under the Liberalized Remittance Scheme (LRS), resident individuals may remit up to $250,000 per fiscal year, defined as April 1 through March 31. In Vietnam, similar regulatory restrictions apply, creating comparable difficulties for EB-5 participants. Due to these constraints, many EB-5 investors from these countries are compelled to use alternative methods to transfer their investment capital abroad. One of the most employed strategies is the use of “currency swap” arrangements, which means funds are exchanged domestically while simultaneously receiving equivalent amounts in U.S. dollars offshore.  

The use of “swap transfers” inevitably disrupts the documented path of funds (POF), which is a critical requirement in EB-5 adjudications. In a typical swap transfer, the investor deposits funds in their local currency into a bank account designated by a third party, which may be an individual, company, or licensed money service business. The third party then remits from his overseas account an equivalent amount in U.S. dollars to the investor’s foreign account, often outside the investor’s country of origin. Nevertheless, under EB-5 regulations and long-standing United States Citizenship and Immigration Service (USCIS) precedent decisions—particularly Matter of Soffici and Matter of Izummi —investors must clearly demonstrate both a lawful source of funds and a documented path of funds. Petitioners must provide a complete and traceable documentation trail showing how the funds moved from the investor to the U.S. investment. 

Swap transfer has created two significant challenges: Break in POFs and lawful source of third-party’s funds (SOF). The US Citizenship and Immigration Services (USCIS) frequently issues Requests for Evidence (RFEs) or Notices of Intent to Deny (NOIDs) to question the lawful source of the U.S. dollars provided by the third-party exchanger. However, recent decisions from the Federal District Courts—including Battineni v. Mayorkas, Zhou v. Noem, and Sun v. USCIS—have provided a glimmer of hope for EB-5 petitioners facing challenges related to documenting the lawful source of funds when third-party exchangers are involved.  

DOES SWAP TRANSFER VIOLATE FOREIGN LAW? 

EB-5 petitioners should still be cautious and avoid becoming overly optimistic because of these recent court cases. Recently, USCIS has raised another new issue frequently in RFEs: whether the third-party exchanger and the holder of the designated account have acted in violation of foreign currency control regulations imposed by the EB-5 investor’s home country. In this context, the U.S. immigration agency increasingly views currency swaps as a form of an “informal value transfer system” (IVTS). This classification signals that the agency may scrutinize such transactions more closely, focusing not only on the lawful source and path of funds but also on whether the methods used to transfer the funds comply with applicable foreign exchange control laws.  

In its most recent RFEs, USCIS questions whether the use of a swap transfer by EB-5 investors may have violated foreign exchange regulations in their home countries. In India, the RFEs state that there is potential noncompliance with the Foreign Exchange Management Act (FEMA), 1999, and LRS. In China, there is a possible violation of Article 255 of China’s Criminal Law, which governs unauthorized foreign exchange activities.  USCIS does not have jurisdiction over foreign laws. The agency only cites potential violations of foreign currency control regulations to challenge the lawful source of funds in EB-5 petitions and has not articulated a clear legal basis for concluding that an alleged breach of foreign currency control regulations in the investor’s home country would, by itself, render the investor’s funds unlawfully obtained.  

In its RFEs, USCIS has repeatedly stated that “the requirements and workings of foreign law are a question of fact, which must be proven by the petitioner.” This position derives from the precedent decision Matter of Hsiung. Consequently, the burden of proof falls squarely on EB-5 petitioners to demonstrate that the use of swap transfers or other alternative remittance methods does not violate the foreign exchange control laws of their home countries. Failure to provide sufficient evidence on this point may result in prolonged adjudication, issuance of NOIDs, or even denials.  

STRATEGIES FOR RESPONDING TO USCIS CHALLENGES ON SWAP TRANSFERS 

In addressing this issue, the first question is whether the use of a swap transfer constitutes a violation of the lawful source of funds requirement—particularly in cases where USCIS does not challenge the source of funds of the third-party exchanger.  

Under the governing regulations, specifically 8 C.F.R. § 204.6(e) and § 204.6(j)(3), EB-5 petitioners are required to demonstrate only that the investment funds were obtained lawfully. There is no regulatory requirement to prove the legality of every subsequent transaction by unrelated third parties when those funds are transferred abroad.  

The only statutory basis USCIS could arguably rely upon is the definition of “capital” under 8 C.F.R. § 204.6(e), which excludes “assets acquired, directly or indirectly, by unlawful means (such as criminal activities).” As such, USCIS has not asserted that funds remitted to the United States via swap transfers were unlawfully obtained. Instead, the agency appears to be focusing on broader concerns about foreign currency control compliance and the perceived risks associated with IVTS rather than invoking the regulatory definition of “capital.” 

Facing this new line of scrutiny from USCIS, EB-5 petitioners and their attorneys may consider advancing arguments from the following three perspectives: 

1. Clarifying the Lawful Source Standard 

Under 8 C.F.R. § 204.6(j)(3), the petitioner’s burden is limited to demonstrating that their own investment funds were obtained through lawful means. USCIS’s reliance on the definition of “capital” under 8 C.F.R. § 204.6(e)—which excludes assets “acquired, directly or indirectly, by unlawful means”—is arguably misplaced when the agency has not alleged that funds obtained via swap transfers were illegally sourced. Petitioners can argue that the definition of “capital” should be applied narrowly and not extended to impose additional evidentiary burdens not contemplated by the regulations. 

2. No per se prohibition on swap transfers 

Unless USCIS alleges explicitly that the investor funds were derived from illegal activities, the mere use of a swap transfer should not, by itself, invalidate an EB-5 petition. In fact, the instructions for Form I-526E expressly acknowledge the possibility of using third-party exchangers, such as hawala networks, for transferring investment funds. This recognition undercuts any claim that swap transfers are inherently impermissible under the EB-5 program. 

3. Submitting an opinion letter from a qualified foreign legal expert 

EB-5 investors may also strengthen their response by submitting an opinion letter from a licensed attorney in the investor’s home country. Such an opinion can analyze whether the swap transfer transactions at issue do not violate the relevant foreign currency control regulations, particularly in cases where the local currency transferred by the petitioner never actually leaves the country. Under Castillo v. Barr, 980 F.3d 1278, 1284 (9th Cir. 2020), USCIS must give “due regard” to expert testimony, as such testimony constitutes evidence capable of supporting the petitioner’s factual position. Accordingly, a well-drafted foreign legal opinion can be a persuasive tool in rebutting RFEs or NOIDs raising concerns about foreign currency control compliance. 

APPROACHES MUST BE STRATEGIC 

Swap transfers have become a more common mechanism for EB-5 investors from countries with strict foreign currency controls, such as China, India, and Vietnam. However, their use introduces complex legal and evidentiary challenges during EB-5 adjudications. By adopting a strategic, evidence-driven approach, petitioners can mitigate risks and strengthen their EB-5 cases despite USCIS’s heightened scrutiny. 

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