EB5 Investors Magazine Volume 1 Issue 1 | Page 30

Continued from page 29 EB-5 market (by far the largest pool of EB-5 investors in the Middle East) and contemporaneously shortened OFAC license processing times for Syrian investors. Estimating OFAC processing times for specific licenses was and is never an exact science; average processing hovers around four months and could exceed 12 months. This extended EB-5 process created investor fatigue and in some instances delayed EB-5 projects. While the requirement of no specific OFAC license has removed a layer of bureaucracy for Iranian EB-5 investors, practitioners should still pay close attention to OFAC as the regulations and exemptions are continually being revised. Transfers must still adhere to both section 560 and the rules pertaining to Specially Designated Nationals. Syrians still need a specific license, and with a lot of “old money” leaving the Middle East, running SDN checks on all Middle Eastern investors and their source of funds should be the first action taken by a practitioner. As the market develops, Regional Centers should also do their due diligence if making referral fee payments to Middle Eastern agents, as OFAC infractions carry both severe financial and criminal penalties. It would be prudent to implement OFAC compliance measures when dealing with any EB-5 investor, especially Middle Eastern and South American investors. 30 With capital export restrictions in most non-gulf Arab states and Iran, getting investor funds to the United States can be a challenge. In addition, EB-5 petitions require a clearly documented money trail from the investor to the new commercial enterprise. Practitioners must be careful not to advise investors on how to break capital export restrictions (methods of transfer), and at the same time, should make them aware of the documentation required to support the investor’s petition. Advice limited to types of documents needed, rather than the method of transfer, should be sufficient for investors to make a successful transfer and obtain adequate evidence of their money trail. “This centuries old alternative banking system, or network, allows for the transfer of value without the actual movement of money across borders (not too different from traditional banking where digits on one computer move to another).” In most cases, investors will be utilizing hawala (or “sarrafi” in Iran) to make the transfer to the United States. This centuries old alternative banking system, or network, allows for the transfer of value without the actual movement of money across borders (not too different from traditional banking where digits on one computer move to another). The transactions made within the hawala network are based completely on the honor system and the reputation of hawala brokers. However, since this does not happen through regulated banking channels, there are many questions surrounding the legality of hawala due to its E B 5 I n v e s to r s M ag a z i n e