A pivotal aspect of the EB-5 investment is to prove that the funds invested come from legitimate earnings. For some investors, like Iranians, there is an extra hurdle, for transferring the funds from Iran to the U.S. In fact, most Iranian investments are encumbered and, therefore, necessitate a diligent compliance with U.S. law.
I. EB-5 Investment Procedures
An Iranian investor looking to obtain a U.S. EB-5 Visa through investment in a Regional Center must go through a variety of procedures in order to utilize the EB-5 program. First, potential investors need to determine whether their EB-5 funds transfer falls within the Department of Treasury’s Office of Foreign Assets Control’s (“OFAC”) General License. The investor might need an opinion letter from legal counsel providing evidence from financial institutions that the transfer does not violate the sanctions program. Restricted party screenings must be completed to ensure the individuals and entities involved in the investment are not U.S. government prohibited parties. Such parties are restricted from doing business in the U.S. or with a U.S. Person (this includes U.S. businesses) U.S. person means a person (as defined in § 120.14 of this part) who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3).
In addition, prior to becoming U.S. Persons, Iranian nationals must:
a. Absolve themselves of any involvement in any Iranian company, including foreign branches of any Iranian company;
b. Rid themselves of any shares in any Iranian company;
c. Cease providing any remote contributions or advice to any Iranian company; and
d. Cease collecting any salary from any Iranian company, including foreign branches of any Iranian company.
Individuals planning to become U.S. Persons should ensure all their personal funds are transferred out of Iran in one transaction. This is because once the investors have become U.S. Persons, they will need a Specific License from OFAC to transfer to the U.S. any additional personal funds from a sanctioned bank or to collect a pension or retirement earnings from any Iranian company. Obtaining such license can take 8-12 months. Without OFAC’s approval, banks are not allowed to, and will refuse to transfer Iranian funds into the United States. All financial transfers from Iran to the U.S. must adhere to strict procedures.
II. What Has Changed?
The U.S. government has opened up certain Iranian industries to U.S. business and their foreign subsidiaries. It has also become easier for foreign companies with connections to the U.S. to take advantage of opportunities in Iran. Nevertheless, the financial trading gates are not completely open, and many sanctions remain in place. U.S. parties are still prohibited from entering into most activities with or in Iran.
On January 15, 2016, the U.S. government implemented sanctions relief primarily on what are known as “secondary sanctions,” or those sanctions imposed by the U.S. government against non-US Persons. The OFAC issued a variety of pronouncements including:
· A General License for the importation of certain Iranian foodstuffs and Iranian-origin carpets;
· A favorable licensing policy for opening the Iranian commercial airline market to U.S. Persons;
· A General License authorizing U.S. owned or controlled foreign entities to engage in activities involving Iran in which the U.S. parent does not participate. However, such activities still cannot involve the U.S. and Iranian investors are still bound by the majority of sanctions that have been in place for years.
III. How Iranian EB-5 Investors Can Work Within the System?
Iranian investors should always follow three steps to ensure all the work is within the parameters of U.S .law:
a. Obtain a current legal opinion explaining what you can and cannot do and always include the details. Explore all aspects of a transaction. Some activities are incidental to approved actions and are considered permitted and others are not;
b. Screen all Parties: Restricted party screenings ensure that no U.S. government prohibited parties are involved in the transaction. Each party must be screened and reviewed separately;
c. Document all Decisions and Reasoning: ensure you know all the parties involved, their nationalities, and the legal limits of the transaction.
d. Perform anti-corruption due diligence and document your diligence in writing for further protection.
IV. What Do We Expect in the Future?
OFAC will continue to revise the Iran sanctions. In the meantime, all parties should continue completing restricted party due diligence to maintain compliance in this changing environment.