EB5 Petitions and Escrow Accounts



In order to be eligible for EB5 classification, an immigrant investor is required to show that he has invested, or is in the process of investing, the requisite amount of capital in a qualifying commercial enterprise (among many other requirements). Provided that the investor follows United States Citizenship and Immigration Services (USCIS) policy, he or she may place his or her investment capital in escrow, to be released to the commercial enterprise upon approval of the EB5 petition, the issuance of the EB5 visa, and/or the approval of the investor's application for adjustment of status. In this article, we will examine issues concerning the use of escrow accounts in the EB5 context.

Statutory and Regulatory Background

Neither the statutes nor the regulations concerning EB5 petitions specifically address the use of escrow accounts. However, the current policies regarding escrow accounts stem from the statutes and regulations.

Section 203(b)(5) of the Immigration and Nationality act makes immigrant visas available to aliens who have invested or are in the process of investing a certain amount of capital in a new commercial enterprise. An alien who is approved for EB5 classification may be granted conditional permanent resident status. Under section 216A(b)(1) of the INA, the alien must, within two years of being admitted as a conditional permanent resident, establish that he or she has invested or is in the process of investing the requisite funds into the new commercial enterprise, among other requirements.

The scope of the term “in the process of investing” is limited by the implementing regulations for the EB5 program. 8 C.F.R. 204.6(j)(2) requires the immigrant investor to establish that he or she “has placed the required amount of capital at risk for the purpose of generating a return on the capital placed at risk.” The regulations continue: “Evidence of mere intent to invest, or of prospective investment arrangements entailing no present commitment, will not suffice to show that the petitioner is actively in the process of investing.” That is, although the investor is not required to have actually invested all of the requisite amount of capital either at the time the EB5 petition is being adjudicated or at the time the petition for the removal of conditions is being adjudicated, the petitioner must have still placed all of the capital “at risk.” 8 C.F.R. 204.6(j)(2)(i) states that “[b]ank statement(s) showing amount(s) deposited in United States business account(s) for the enterprise” is one type of evidence that may be submitted to establish that the requisite amount of capital has been placed at risk. In order to be eligible for the removal of conditions, 8 C.F.R. 216.6(a)(4)(iii) requires the petitioner to establish that he or she “has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence.”

USCIS Policy Manual Guidance on Escrow Accounts

The USCIS's current guidance on escrow accounts in the EB5 context is found in its Policy Manual (PM) at 6 USCIS-PM G.2(A)(2) [PDF version].

The PM states that an immigrant investor's money may be held in escrow, provided that the “immediate and irrevocable release of the escrowed funds” is contingent only on:

Approval of the Immigrant Petition by Alien Entrepreneur (Form I-526); and
Visa issuance and admission to the United States as a conditional permanent residence, or
Approval of the investor's Application to Register Permanent Residence or Adjust Status (Form I-485).

In short, the investor may place his or her investment capital in escrow, but the release of the capital to the new commercial enterprise may only be conditioned on the Form I-526, the investor's obtaining a visa, or the approval of the Form I-485. The investor must satisfy the USCIS that the release of funds from escrow would be “immediate and irrevocable” upon the applicable condition(s) being satisfied.

When adjudicating the Form I-829, Petition by Entrepreneur to Remove Conditions on Permanent Resident Status, the USCIS will require the investor to submit “evidence verifying that the escrowed funds were released and that the investment was sustained in the new commercial enterprise for the period of the immigrant investor's residence in the United States.” The clear rule here is that the release of escrowed funds cannot be conditioned on the removal of conditions. Rather, funds that were placed in escrow must have already been released prior to the removal of conditions. This rule follows from the fact that the PM requires the release of the escrowed funds to be conditioned on one of three events that would necessarily occur before an investor could apply for the removal of conditions.

The escrow accounts may be located in the United States or abroad.

Regarding U.S. escrow accounts, the PM states that “[a]n immigrant investor's funds may be held in escrow within the United States to avoid any evidentiary issues that may arise with respect to issues such as significant currency fluctuations and foreign capital export restrictions.”

The PM states that foreign escrow accounts are “not prohibited as long as the petition establishes that it is more likely than not that the minimum qualifying capital investment will be transferred to the new commercial enterprise in the United States upon the investor obtaining conditional permanent resident status.” The PM advises adjudicators to be aware of currency fluctuation issues when funds are held in foreign escrow accounts. It states that in such cases the “USCIS reviews currency exchange rates at the time of adjudicating the Form I-526 petition to determine if it is more likely than not that the petitioner will make the minimum qualifying capital investment.” (Emphasis added.) Regarding the subsequent adjudication of the Form I-829, the PM states that the “USCIS reviews the evidence in the record, including currency exchange rates at the time of the transfer [of funds from the escrow account], to determine that, when the funds were actually transferred to the United States, the petitioner actually made the minimum qualifying capital investment.” (Emphasis added.) In cases where the petitioner is relying on funds placed in foreign escrow accounts, he or she should be cognizant of issues involving the exchange rate both at the time of the adjudication of the Form I-526 and at the time the funds are actually released from escrow.

The “more likely than not” standard is properly read as applying to all EB5 cases involving escrow accounts, whether they are based in the United States or abroad. The immigrant investor has the burden of proof by the preponderance of the evidence — or more likely than not — of showing that the funds will be released from escrow upon the relevant condition being met.

Unpublished Decision on Case Involving Funds Deposited in Escrow

On April 17, 2013, the Administrative Appeals Office (AAO) issued an interesting unpublished decision affirming the denial of an EB5 petition for reasons hinging in large part on funds deposited in an escrow account [PDF version]. Although the decision is not binding on other cases, it provides an interesting window into how the USCIS views several issues regarding escrow accounts and EB5 petitions.

After the petitioner filed the Form I-526, he received a Request for Evidence (RFE) that the requisite funds had been committed to the new commercial enterprise. In response, the petitioner submitted documents showing the transfer of $100,000 to an escrow account. However, the documentation occurred after the filing date of the Form I-526. The AAO concluded that this transfer did not comport with 8 C.F.R. 204.6(j)(2), “which requires that the petitioner demonstrate the full required amount of capital either already be invested in the [new commercial enterprise] or be committed to it.” The petitioner's placement of funds into the escrow account after the filing of the Form I-526 ran afoul of the rule that the “petitioner must establish eligibility at the time of the filing of the petition; a petition cannot be approved at a future date after the petitioner becomes eligible under a new set of facts.” The former Immigration and Naturalization Service (INS) recognized this rule generally in Matter of Katigbak, 14 I&N Dec. 45, 49 (Comm. 1971) [PDF version]. It recognized it specifically with regard to EB5 petitions in Matter of Izummi, 22 I&N Dec. 169, 175 (Assoc. Comm. 1998) [PDF version].

Thus, if the petitioner is relying on funds placed in escrow, the funds must be placed in escrow before the filing of the Form I-526. This is because the Form I-526 must be approvable when filed. In the EB5 context, this means that all of the required capital must be placed at risk. 8 C.F.R. 204.6(j)(2) makes clear that the intent to invest is not sufficient for establishing eligibility for EB5 classification.


By placing funds in escrow, an EB5 petitioner may hedge against the possibility that the petition or his or her application for permanent resident status will be denied. Furthermore, placing funds in escrow in a U.S. account may protect against foreign currency fluctuations. However, the petitioner must ensure that he or she complies not only with the current policies regarding escrow accounts in the EB5 context, but also all of the other EB5 requirements, including establishing that the investment capital is the petitioner's, documenting the lawful source of funds, and more.

A prospective immigrant investor should consult with an experienced immigration attorney in the area of investment immigration before filing an EB5 petition. If the investor decides to go forward with an EB5 petitioner, he or she should work closely with an experienced attorney to craft a business plan and ensure that the petition will be supported with compelling evidence before filing. If some or all of the investment capital is placed in escrow, an attorney may help the petitioner ensure that the applicable requirements are satisfied.

To learn more about investment immigration generally, please see our growing selection of articles on the subject [see category].