China Sees Explosive Growth in Immigrant Investor Visas

UNCLAS SECTION 01 OF 02 GUANGZHOU 000667

SIPDIS

STATE FOR CA/VO, CA/FPP, CA/P, EAP/CM

E.O. 12958: N/A
TAGS: CVIS CMGT KFRD ECON EFIN CH
SUBJECT: China Sees Explosive Growth in Immigrant Investor Visas

GUANGZHOU 00000667 001.4 OF 002

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5. (U) EB5 applications present numerous adjudication challenges.
While U.S. law requires that investments be made with "capital
obtained through lawful means", in practice it is difficult to make
this determination for Chinese applicants. Cases routinely include
hundreds of pages of Chinese financial documentation, which is
frequently unreliable and, even if legitimate, is beyond the
expertise of IV staff to evaluate in detail. Additionally, due to
the strict mandates of China's Foreign Currency Exchange Act,
transferring investment funds out of China is a difficult task. To
stay within the confines of Chinese law, yet satisfy the "investment
or actively in the process of investment" provision of 8 CFR
204.6(j)(2), applicants often create an offshore escrow account to
secure the investment funds before transfer to the U.S. enterprise
once immigrant status has been granted. Applicants commonly
establish the escrow accounts in Hong Kong. To transfer the
required $500,000 investment to Hong Kong, applicants often use
multiple transactions involving different individuals, thus
confusing the trail of wealth and making even very legitimate cases
hard to evaluate. Separately, post has limited information on the
progress of job creation targets for the regional programs in the
U.S. Post has contacted USCIS to learn more on its adjudication
criteria in order to develop a training program for visa officers.




6. (U) While post has not yet detected any cases of outright fraud
relating to the investment funds used to qualify for EB5 status,
there have been some questionable cases. Some applicants have
little knowledge of the program in which they are investing; some
are even unaware of the rate of return on the investment. This lack
of knowledge makes it more difficult to judge applicants' bona
fides. And, as always, the allure of a U.S. visa has attracted
other kinds of fraud. In one case, an investor visa applicant
appeared for interview with his wife and four children. When
suspicions arose about their relationship and the consulate
suggested the possibility of DNA testing, the applicant admitted
that two of the children were not his own. In a separate case, post
assisted the Internal Revenue Service in a tax evasion investigation
of an EB5 recipient. As the program becomes more and more heavily
marketed, it is likely that more such problems will be detected.

COMMENT


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7. (U) Guangzhou expects to continue to see an increasing number of
EB5 investor immigrant applicants and will seek to develop better
means to evaluate these cases through more direct communication with
USCIS on criteria, updates in the program, and reports on any fraud
trends which have been discovered by USCIS. Guangzhou officers and
LES will also continue to monitor reports on the EB5 program in
China, including complaints about problems involving EB5 visa
brokers or agents. End Comment.

GOLDBECK