Following the Overseas Investments Trend

Recently, China Central Television (CCTV), China’s state-run broadcaster, accused Bank of China (BOC) of money launderingby helping wealthy Chinese send their money offshore( The service is named “Youhuitong”).  The following day, China CITICBankemerged as thesecond national bank implicated in offeringtoillegallytransfer money overseas.Both banks decried the money laundering accusation, indicating that the investigation contains “discrepancies” and was “biased.”This news launchedextensive discussion and captured the focused attention ofEB-5 investors. Two major points are causingconcern among the investors:

Will I-526 applications be declined if Youhuitong transfers investors’ money?
Investors are concerned thatif they use Youhuitong to transfer their EB-5 investmentcapital, that the money laundering investigation will affect the USCIS approval process for the I-526. The USCIS requires two personal fund documents forEB-5 investments: Source of Fund and Path of Fund. The Path of Funddocument provides evidence of money transfer. China controls the amount of money one can exchange into foreign currency; one citizen can exchange only US$50,000 worth of foreign currency per year. The traditional way to transfer money is to havefriends or exchange facilitators perform the currencyexchange in the amount of$50,000perperson, which has not been prohibited by the State Administration of Foreign Exchange. Another method is through underground banking in Hong Kong. Both methods have not been questioned by either the Chinese authorities or by the USCIS.Youhuiting gives the green lights to Chinese EB-5 investors. It follows the market trend and was launched by one of the big four banks in China.

Will the EB-5 market be cooling down?
There are two different opinions on this topic. One opinion is thatChina encouragesoverseas investments and that Renminbi(RMB) going abroad and overseas investments are inexorable trends. The State Administration of Foreign Exchange of China supports this “walk out” strategy. Youhuitong-type services offer to transfer large sums of money into foreign exchange in one step.While itmay seem thatYouhuitong-type services broke the foreign exchange rules, licenses for these type of services were issued to BOC in late 2011 and to CITICBank in late 2012 bythe Guangzhou branch of the People’s Bank of China.In fact, “BOC and CITICBank are not the only banks providing these kinds of services.  All major banks do. It’s an open secret,”claimed an employeeof a major state bank.This is a sign of relaxed restrictions in foreign exchange rules.

Theopposing opinionbelieves thatthe Chinese government aims tocool down investmentsin overseas property. As President Xi Jinping’s Anti-Corruption Campaignis on-goingin China, it couldreduce the number of EB-5 investors.  “Naked officials”, those who send their families abroad and move personal property overseas, account for a significant number of EB-5 investors. Now the “naked officials” phenomenon is being investigatedon a large-scale as possible “money laundering activities.”

In EB-5 Supermarket’s opinion, the cross-border Renminbi business is rapidly growing due to the developments of a global market and the internationalization of RMB. The State of Administration of Foreign Exchange tries to improve overseas investments and foreign exchange withinallowable capital amounts.We anticipate that the EB-5 market will openup to the more “average” people seeking legal immigration investment options. EB-5 Supermarketcontinues to study the Chinese marketand policies in depthand will track the latest news of these on-going changes.
 

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Overseas Investments trend EB-5 market