For many EB-5 investors with diverse assets, fixed deposits (FDs) or certificates of deposit (CDs) are where years of savings may actually be sitting. Although the names differ, the two are essentially the same savings product: banks in India typically call it a “fixed deposit,” while banks in the United States call it a “certificate of deposit.”
In each case, the investor places a lump sum with a bank for a set term at a fixed interest rate. On the surface, this kind of time deposit looks simple: money is deposited on one date and withdrawn, with interest, on another. For EB-5 purposes, however, those two dates and amounts are only part of the story.
USCIS requires the investor to show that the invested capital was obtained through lawful means. That means a documented trail showing how the money was earned, how it came to sit in the deposit, when the deposit was closed, and how the proceeds reached the EB-5 project.
Below, we walk through how funds held in FDs and CDs are traced back to their original source and where the documentation commonly falls short.
Why FDs and CDs Work Well and Where Cases Go Wrong
Both types of deposits have advantages as an EB-5 source. The funds are usually held by regulated banks, and such banks typically issue receipts or certificates for each deposit and renewal. When the paperwork is complete, a time deposit can tell a tidy, verifiable story.
What many investors do not realize is that an FD or CD is only a holding place, not the origin of the money. A deposit opened in 2014 and renewed a dozen times since may have been funded by salary, a property sale, a business distribution, a gift from a parent, or some combination. USCIS will not only review the opening and closing of the deposit but also where the money to fund it originally came from, and if the initial filing does not answer that question, a Request for Evidence (RFE) should be expected.
Prove Where the Money Came From
USCIS will want to know where the money came from before it was ever placed in the deposit. For each FD or CD the investor plans to liquidate, the petition must identify the money that went into it and establish the lawful source of that money. Salary savings, business income, property sales, and gifts or inheritances each carry their own evidentiary requirements.
Gifted funds call for added care, because USCIS applies the same scrutiny to the donor’s money as it does to the investor’s, so the donor’s lawful source must be established as well. Because every case turns on its own facts, building a source-of-funds record that will hold up to USCIS review is best done with experienced EB-5 counsel from the start, before gaps in the record lead to an RFE.
Document the Creation and Liquidation of the Deposit
Next, the history of the deposit must be documented from opening through maturity or closure. The record should show when the deposit was opened, for how much, in whose name, and from which account it was funded, along with every renewal, so there is no gap between the original deposit and the one being closed.
If a deposit was funded by closing earlier ones, each layer must be traced back until the original source of the initial funds is reached. Each of those earlier deposits needs its own paper trail, so the documentation can multiply quickly.
USCIS will also want to see the closing of the deposit. Whether the FD or CD matures on schedule or is broken early, the file should include the closure, any early-withdrawal penalty, and a statement showing the proceeds credited to the investor’s own account.
Trace the Funds to the EB-5 Project
The final step is tracing the proceeds from the account where the deposit was liquidated to the EB-5 project. If the deposit was held in a foreign country, the funds may also pass through a U.S. bank account along the way, and each stop on that path should be documented.
USCIS expects every transfer and currency conversion to be documented, and any international transfer to comply with the sending country’s foreign exchange rules. Each transfer should be supported by bank records showing the sender, recipient, amount, and date, through to the project’s confirmation of receipt.
Conclusion
An FD or CD can be a strong source of EB-5 funds, but only when the full story behind it is documented. A deposit receipt or certificate proves that the money existed, not that the funds used to create it were lawfully earned, and a missing renewal record can break the link between the deposit that was opened and the one that was closed. Building a complete record, from the original source of the funds through the final transfer to the EB-5 project, is the surest way to avoid an RFE, and working with experienced EB-5 counsel early helps ensure no part of that trail is overlooked.
For help documenting FD or CD funds for your EB-5 investment, please contact Jacqueline Treviño at jtrevino@psbplaw.com.