Citing a recent case in the U.S. District Court in the Eastern District of Pennsylvania in which an EB-5 investor’s funds were traceable to questionable and corrupt practices, eb5 matters proposed seven steps that every Regional Center should consider when handling EB-5 investment funds to help ensure that the funds were lawfully acquired.
Following this advice may become even more important as new legislation is expected to call for more intensive due diligence.
Talk with investors directly when there are facts that present visible disconnects (e.g., no income history but large sums in bank accounts). Do not assume that funds in a U.S. bank account are by definition legitimately sourced. Run an OFAC (Office of Foreign Assets Control) screen of your client’s name, and of the names of his or her immediate family members providing a gift for an EB-5 investment. Be alert about funds coming from investors who are either current or past government officials and their immediate family members Spend time with investors to understand the facts before you conclude that funds were sourced unlawfully. Hire a local expert in an accounting or law firm to conduct a background check of your prospective investor and his or her funds. Keep in mind that substance matters over form: document the efforts you make as a Regional Center to refine your practices in reviewing source of funds evidenceRegardless of what new legislation does or does not include, we suggest that every Regional Center maintain and follow a comprehensive checklist for due diligence on the source of EB-5 funds.
– See more at: http://www.datsyn.com/article/4317/2015/08/02/Seven-Steps-for-Regional-Centers-to-Protect-Against-Fraudulent-EB-5-Investments#sthash.EwaqUDzX.dpuf