In order to qualify for the EB-5 Program a foreign investor must transfer $500,000 (or in some cases, $1,000,000) investment capital into a qualifying EB-5 project. The most widely used method to transfer funds is with an EB-5 escrow account, which is not your standard escrow account.
An EB-5 escrow account can provide much needed peace of mind for the investor. Investors will make the release of the escrow funds contingent on their I-526 petition approval. This provides them with an important level of security on their investment.
An EB-5 escrow account is different from a traditional escrow account in a few ways.
Not all banks offer EB-5 escrow accounts. Depending on the bank's risk tolerance, they may decide that they are not willing to offer EB-5 escrow accounts. Therefore, an investor and their agent should conduct due diligence to find a bank that is not only willing to hold the funds in an EB-5 escrow account, but a bank that has a great deal of experience with this type of account. The reason for this is that EB-5 is a highly specialized field and a bank without experience with this particular type of account may find the process difficult, or worse, not worth their time.
Setting up an EB-5 escrow account can be a long process. It is important that the investor's team and the developer work toward setting up the account early on in the process to deal with all the EB-5 issues that could arise. The EB-5 investor will want the terms of the investment structured favorably and locked in place as early as possible. The EB-5 investor may face petition denial or delays if they are not compliant with all the immigration and security rules and regulations. The EB-5 Program has these rules and regulations in place to prevent fraud, but unfortunately they often times cause many long delays in the EB-5 process.
Finding an escrow agent with specific knowledge of and experience with EB-5 escrow accounts is critical to the investor's success. Additionally, project developers can benefit greatly from listing that they have a strong and SEC compliant escrow agreement structure in their marketing materials.
If you still have questions regarding EB-5 escrow accounts, send us a message.