Chinese investors make up more than 80% of the participants in the EB-5 Program. Current banking laws and foreign currency exchange restrictions are making it challenging for Chinese EB-5 investors to transfer funds to U.S. EB-5 investments.
According to the Chinese State Administration of Foreign Exchange (SAFE) each individual Chinese national can only exchange a maximum of $50,000 dollars. To participate in the EB-5 Program, each Chinese national would need to invest a minimum of $500,000 dollars into a U.S. EB-5 project.
How do Chinese investors exchange their money and invest in U.S. EB-5 projects?They are able to accomplish this with the help of friends and family members. The Chinese investor transfers $50,000 dollars worth of Chinese Yuan to 10 trustworthy friends and close family members who then exchange the Yuan to U.S. dollars and deposit it to the investors U.S. account that he or she designated for the investment. This process helps Chinese EB-5 investors overcome the currency exchange restrictions.What's difficult and challenging about this approach is the matter of tracing the source of funds. The EB-5 investor must acquire the bank statements that show all the accounts and parties involved in the process.Another way Chinese investors overcome the currency exchange restrictions is by utilizing a trustworthy third party in Hong Kong to transfer and exchange funds. Hong Kong is a Special Administrative Region and the foreign currency restrictions do not apply. A Chinese investor can also take out a loan secured by their business or real or personal property. The Chinese investor must be careful to provide all the necessary documents to show ownership of the business or property.The transfer of funds can be a challenge due to so many restrictions under the Chinese law. As a result, the Chinese investor may have to transfer funds through multiple accounts, not because the capital isn't lawful and genuine, but because of the Chinese business account restrictions. USCIS may question investment capital that is transferred numerous times between accounts and may delay or reject the EB-5 application. Providing the necessary documents to trace the funds is critical.Chinese investors may want consult with a licensed Chinese attorney to see if they can first get approval from the State Administration of Foreign Exchange (SAFE) to be change the limit and transfer more than the $50,000 dollars before they pursue other alternative approaches. 