Proving the source of EB-5 funds: SOF and POF guidance for Vietnamese investors

Proving a lawful source of EB-5 funds and a transparent path of funds are the two most difficult stages of the United States investment migration process for Vietnamese investors. On internal figures from United States EB-5 specialist immigration law firms, more than 60% of the Requests for Evidence (RFEs) USCIS sends on Vietnamese investors’ cases relate to source of funds.

Preparing the file correctly from the outset saves processing time, avoids refusal and improves the chances of receiving a green card. This article focuses on preparing the capital documentation once the investor has completed the stage ofchoosing a safe and suitable EB-5 project.

What is proving the source of EB-5 funds?

Proving the source of EB-5 funds (Source of Funds — SOF) is the legal concept in theVisa EB-5programme requiring investors to prove that the whole USD 800,000 invested in the project was generated through lawful activity. USCIS requires the origin of each sum to be traced from the initial income that created the money through to the point it is transferred into the EB-5 project’s escrow account.

Theo the USCIS Policy Manual (Volume 6, Part G, Chapter 2), the burden of proving the source of funds rests entirely on the investor. USCIS applies the “preponderance of evidence” standard — meaning the evidence must be enough to show that a lawful origin is more likely than not.

A common mistake among Vietnamese investors is thinking that proving the current account balance is enough. In fact, USCIS requires a full trace from the origin of the money through to the present. For example, where an investor sold property in 2018 for VND 50 billion, then put it on deposit and used the interest to invest further, USCIS needs to see the whole chain of transactions from 2018 to now — not just the final balance.

What is the Path of Funds?

The Path of Funds (POF) is the specific chain of transactions taking USD 800,000 from the investor’s account in Vietnam to the EB-5 project’s escrow account in the United States. The POF requirement has two dimensions: lawfulness under United States law (particularly anti-money-laundering law — the Bank Secrecy Act) and lawfulness under Vietnamese law.

For Vietnamese investors, the POF is particularly complex because Vietnam has fairly strict limits on transferring money abroad. Under the rules of theState Bank of Vietnam, Vietnamese individuals wanting to transfer money abroad for settlement purposes must do so through an authorised bank and comply with the rules on accompanying documentation.

Transferring a large sum such as USD 800,000 cannot be done in a single simple transaction and needs a plan prepared months in advance. USCIS also does not accept opaque transfer routes such as asking a relative to transfer on the investor’s behalf, using informal money transfer services, or structuring transactions to avoid bank limits. Every transaction in the POF must be transparent, documented and capable of being explained.

The common lawful sources of funds for Vietnamese investors

Vietnamese investors may prove the source of EB-5 funds from several different sources. Below are the most common sources and the corresponding documentary requirements.

1. Income from business activity

For business owners or company shareholders, income from business activity is the most common source of funds. The documents to prepare:

• The business registration certificate and any subsequent amendments
• Audited financial statements for the most recent 3 to 5 years
• Corporate income tax and personal income tax returns
• Minutes of the board or shareholders’ meeting on the dividend distribution
• Documents evidencing the transfer of dividends from the company account to the personal account

Where the business operates in a sector with many cash transactions (restaurants, retail), investors need to provide further evidence about the accounting system and revenue recognition process. USCIS is particularly suspicious of businesses whose tax returns show far less than the sums actually distributed to the owners.

2. Income from salary and benefits

For investors who are employees or professionals, salary income may be a lawful source of funds where accumulated over several years. The documents to prepare:

• The employment contract with any addenda and pay rise notifications
• Monthly payslips for at least the most recent 5 years
• Bank statements for the account receiving the salary
• Personal income tax returns
• Documents evidencing bonuses, share awards and share options (where applicable)

Salary as a source of funds is usually accepted more readily by USCIS than other sources where the file is consistent. However, investors should note that USCIS will compare total income against total household spending to assess whether it is plausible.

3. Income from property

Many Vietnamese investors own property and may sell it to raise the investment capital. The documents to prepare:

• The land use right and home ownership certificate
• The original purchase contract evidencing the purchase price
• The current sale contract with any addenda
• Receipts for registration tax and transfer income tax
• Documents evidencing receipt of the sale proceeds through a bank

Where the property was bought many years earlier and the price has risen several times over, investors need to prove both the original purchase funds and the sale transaction. Where the property was given or inherited, further documents are needed on the donor or the will and the origin of the donor’s assets.

4. Income from securities investment

Income from securities investment at home and abroad is an increasingly common source of funds. The documents to prepare:

• Securities account statements for at least the most recent 3 to 5 years
• Detailed profit and loss reports for each transaction
• Documents evidencing payment of tax on securities transfer income
• The origin of the capital originally invested in securities

USCIS requires proof of both elements: that the capital originally invested in securities was lawful, and that the transactions were carried out through a licensed brokerage. For securities investment abroad, proof is needed that the transfer of money abroad complied with State Bank of Vietnam rules.

5. Inheritance or gift

Funds from inheritance or gift are accepted by USCIS but with strict documentary requirements. The documents to prepare:

• The will (for an inheritance) or the deed of gift
• The death certificate of the person leaving the assets (for an inheritance)
• Documents evidencing the ownership of the deceased or the donor
• The origin of the deceased’s or donor’s assets
• Documents evidencing payment of tax on inheritance or gift income

USCIS will trace back to the origin of the donor’s or deceased’s assets. Where the inherited asset is property, proof is needed of how the deceased came to buy it. Where it is cash, proof is needed of the source from which the donor earned it. Missing this backward trace is a common cause of USCIS issuing an RFE.

6. Borrowing from a financial institution

Under the RIA 2022, investors may use a personal loan for their EB-5 investment provided the loan is secured on the investor’s own assets. The documents to prepare:

• The notarised loan agreement
• Documents on the security (the ownership certificate)
• Documents showing the security is lawfully owned by the investor
• The origin of the security asset — which must also be fully evidenced

Under the decision in Matter of Izummi, USCIS does not accept a loan secured on third-party assets (such as a loan secured on the home of parents or siblings). The loan must be a personal loan secured on assets owned by the investor.

The route for transferring USD 800,000 from Vietnam to the United States

Once a lawful source of funds has been proved, the next step is transferring the money to the United States along a route complying with the law of both countries.

The State Bank of Vietnam rules

Under Circular 20/2022/TT-NHNN, Vietnamese individuals wanting to transfer money abroad for settlement purposes must meet the following conditions:

• Holding documents evidencing the purpose of the transfer (for example the Subscription Agreement with the EB-5 project)
• The transferring account must be in the name of the person emigrating
• The sum transferred must match the value committed in the settlement application
• The transaction must be carried out through a bank licensed by the State Bank
• Accompanied by documents evidencing the origin of the money

The major banks in Vietnam such as Vietcombank, BIDV, Techcombank and ACB all offer settlement transfer services for EB-5. Each bank has its own process, usually taking 4 to 8 weeks to complete the whole assessment and transfer.

The common transfer routes

Depending on personal financial circumstances, Vietnamese investors may choose one of the following routes.

Route 1 is transferring directly through a Vietnamese bank. The investor prepares the full documentation and files it at the bank together with the signed Subscription Agreement with the EB-5 project. The bank then makes a SWIFT transfer directly to the escrow account in the United States. This is the simplest route but requires the investor to have the money in a Vietnamese account at the time of transfer.

Route 2 is selling foreign currency domestically before transferring. Where the investor holds USD in Vietnam as a foreign currency deposit, they may transfer directly without a currency exchange. However, the origin of the USD in the account needs to be clearly proved, including when the USD was bought and the bank transaction through which it was bought.

Route 3 is transferring through several lawful intermediate accounts. For investors with accounts at several banks, money may be gathered from several accounts into a single account before the international transfer. Every intermediate transaction must be fully documented.

The mistakes to avoid when transferring money

Many investors make mistakes during the transfer that lead to USCIS refusing the case.

Mistake 1 is transferring money through relatives or friends. Although this can help get around bank limits, USCIS will not accept it and treats it as a “third-party payment” — failing the requirement that the money come from the investor themselves. Where this has already been done, the whole transaction must be reversed and redone correctly.

Mistake 2 is using informal money transfer services. “Black market” services outside the formal banking system do not create transaction documents meeting USCIS standards, and may breach the anti-money-laundering laws of both Vietnam and the United States.

Mistake 3 is breaking transactions up to avoid limits. Deliberately splitting a transaction into several amounts below USD 10,000 to avoid reporting requirements is prohibited conduct (structuring) underFinCEN’s anti-money-laundering law. Where it is found, the transaction may be treated as fraudulent and the whole EB-5 case refused.

Preparing the source of EB-5 funds documentation for the I-526E

Once the transfer is complete, investors need to assemble the whole SOF and POF file to submit with the I-526E. This file usually runs from 300 to 800 pages depending on the complexity of the source of funds.

Read more aboutEB-5 SOF from business in VietnamorEB-5 SOF from inheritance and gifts.

The standard file structure

A standard EB-5 source of funds file comprises the following parts in order:

• Source of Funds Summary: a 3 to 5 page overview
• Funds Flowchart: a diagram illustrating the route from the original source to the escrow account
• Income documents: by each source of funds (business, salary, property and so on)
• Tax documents: tax returns and payment receipts
• Bank documents: statements for the relevant accounts
• Transfer documents: the SWIFT confirmation and the Vietnamese bank documents
• English translations: all Vietnamese documents must have a certified translation

The quality of the source of funds file depends partly on the support capability of the Regional Center sponsoring the project. The criteria for choosing a Regional Center are analysed in the articleWhat an EB-5 Regional Center is: criteria for choosing a reputable regional centre.

Translation quality

USCIS requires all non-English documents to be accompanied by a translation with the translator’s certification of accuracy. A high-quality translation is important because errors in the translation can create inconsistencies between the original and translated documents — leading to doubts at USCIS.

It is best to use a translation provider with expertise in financial and legal documents, particularly one experienced in translating EB-5 files for Vietnamese investors. The cost of translating a whole file is usually VND 50 to 150 million depending on the number of pages.

Summary

Proving a lawful source of EB-5 funds and a transparent path of funds is a core requirement but also the greatest challenge for Vietnamese investors. More than 60% of the RFEs USCIS sends on Vietnamese cases relate to source of funds, showing how important careful preparation from the outset is.

Investors should start gathering source of funds documentation as early as possible — ideally 6 to 12 months before filing the I-526E. Working closely with an EB-5 specialist immigration lawyer and a financial specialist experienced with Vietnamese investors is the effective approach to building a complete SOF/POF file.

For investors wanting to optimise both the investment (USD 800,000 instead of USD 1,050,000) and the time to a visa, choosing a project in a TEA area is the key factor. The details are in the articleEB-5 TEA areas: reserved visas, rural TEA and high unemployment TEA.

Finally, investors need to recognise that preparing a high-quality SOF/POF file may cost several hundred million dong. However, against a total investment of USD 800,000 and the goal of a green card for the whole family, investing in a quality file is well worth it and considerably reduces the risk of refusal or delay during the assessment byUnited States Citizenship and Immigration Services (USCIS).