Taken from USCIS EB-5 Immigrant Investor Program Stakeholder Meeting on December 16, 2010.
Question: OFAC issue with Iranians. What is USCIS policy on getting an OFAC license for Iranian investors? At what stage of the EB-5 process does the license need to be acquired? Does USCIS and OFAC coordinate these policies? If so, how?
Answer: The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. OFAC acts under Presidential national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze assets under US jurisdiction. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close cooperation with allied governments.
31 CFR 560 Prohibits certain U.S. Transactions with Iran, known as the “Iranian Transaction Regulations". (ITR)
Pursuant to Section 3 of Executive Order 12959, all federal agencies are “directed to take all appropriate measures within their authority to carry out the provisions" of the ITR.
Civil monetary penalties ITR violation can be $250,000 or twice the value of the transaction at issue, whichever is greater.
Criminal penalties can include a fine of up to $1,000,000, and possible incarceration of up to 20 years. The statute of limitations on these violations is 5 years.
USCIS has met with OFAC in order to learn about how ITR requirements may impact lawful source of funds requirements in EB-5 petitions. OFAC has confirmed that:
the U.S. recipients of funds from Iranian investors as well as any individuals involved in structuring/facilitating these transactions would be in violation of the ITR unless OFAC licensure procedures have been followed.
Investment of funds that have passed through prohibited banks would also be in violation of the ITR. For a list of prohibited banks and Specially Designated Nationals (SDN) [See: http://www.treasury.gov/resource-center/sanctions/SDN- List/Pages/default.aspx.]
These investors are required to apply for and received a license from OFAC, or a letter stating that no license is needed.
OFAC will determine if such transactions will get a license or not via the application procedure set forth in 31 CFR 501.801(b ).
The only instance where a license would not be required is when the Iranian national resides outside of Iran and the money is shown to be obtained through a lawful source and transferred to the United States without having traveled through a prohibited bank.
In all other situations, any U.S. recipient of prohibited funds and facilitators of such transaction (attorneys, accountants etc.) should apply for a license from OFAC, who will determine if the transaction is or is not prohibited by the ITR and, if prohibited, whether to grant a license to permit the transaction.
OFAC has indicated that each individual transaction must be licensed separately.
The lawful source of an EB-5 investor’s capital investment must be established at the time of filing of the Form I-526 petition. The application for licensure with OFAC must be resolved prior to the filing of a Form I-526 petition by an EB-5 investors if the lawful source of the capital investment may be impacted by OFAC licensure requirements.
The Administrative Appeals Office recently issued an unpublished decision which examines OFAC licensure requirements in the EB-5 context which may be helpful to those who wish to have further information on this topic.[See http://www.uscis.gov/err/B7%20-%20Form%20I-526%20and%20I-829/Decisions_Issued_in_2010/Sep212010_01B7203.pdf.]
If the OFAC license appears to be limited and does not appear to cover all of the transactions presented in the I-526 petition, then the petitioner has failed to establish lawful source of funds.
If the license does not authorize any transactions that occurred prior to the date of issuance, then the license cannot cover the transfer of funds from Iran included in the petition where the license was obtained after the petition was filed.