The immigration regulations require the E-2 treaty investor to prove that the invested capital was “obtained through lawful means.”. USCIS often insist upon substantial documentation to prove lawful source of funds. Although the regulatory list of documents is in the disjunctive, in practice USCIS requests all of the listed categories of documents and, usually significant additional documentation. This is one area of the law where simply following the regulations will not be sufficient. The regulatory requirements should be viewed as a starting point. Sometimes tax returns will show a sufficient enough income to preclude the necessity of any further documentation.

Documenting lawful source of funds requires extreme attention to detail and knowledge of business documentation and sometimes of finance and accounting. Many financial transactions require a multitude of documents to evidence, and USCIS will insist on all of the detailed documentary evidence. It is only necessary to prove where and how the investor obtained the required invested funds. It is unnecessary to prove where the investor obtained every dollar he or she now has or ever had. The difficulty of documenting the lawful source of funds often varies greatly by country. It can be especially difficult in countries where no tax returns must be filed or where full disclosure of revenues and profits on tax returns is the exception rather than the rule. Where tax returns do not have to be filed, this should be documented. Where tax returns must be filed but the individual’s tax returns show little income, the documentation of the source of funds should provide overwhelming evidence to counter the negative implication that comes from a review of the tax returns.

Documenting lawful source of funds is a different requirement than the requirement to trace the funds from the individual investor to the investment enterprise. This also needs to be done in great detail. For countries with restrictions on the outflow of currency, this can be especially difficult, since the investor may engage in several layers of transactions between the money leaving the investor’s account overseas and arriving in the US enterprise.

In documenting lawful source of funds, the ultimate focus is on the person who originally obtained the funds. If the investor obtained all funds on her own, this is not an issue. If the funds resulted from a gift, the lawful source of the giftor’s funds must be documented. If the source of funds was a loan, the lawful source of the lender’s funds must be documented, and the lawful source of any collateral put up by the investor for the loan. If the source of funds is an inheritance, the decedent’s source of funds may be the issue.

Often in documenting lawful source of funds, the attorney or client must make a judgment regarding how far back to go with the documentation. If the source of funds is a real estate transaction that resulted in substantial proceeds from the sale of real estate, the documentation of the real estate sale is required. If the real estate was purchased within the last several years, it is highly recommended to document how the investor obtained the money to purchase the real estate now sold. If the real estate was purchased 30 years ago, it may be impossible to provide such documentation. There is no clear line regarding how far back one must go to obtain documentation, with “reasonableness” being the rule of thumb. The same concepts apply to securities transactions. For inherited money, if the decedent earned his or her money 50 years ago, USCIS may agree it is not possible to document the earning of those funds.

Although primary documents should be obtained wherever possible, written statements, affidavits and resumes can help fill some holes in the primary documentation and can help to paint a picture that satisfies the USCIS examiner that the invested capital had a lawful source. It is always a good idea to provide a narrative description of the investor and the invested funds, with citations to the documentary exhibits, rather than relying on the USCIS examiner to understand all of the documentation and to conclude that the investor wants drawn from the documentation.
In many investment cases, documenting the lawful source of funds can be the most arduous and time consuming part of the process. The investor should be forewarned of the need for substantial documentation. Sometimes, the investor may have gone to great lengths to avoid having documentation of the very transactions that now must be proved for the immigration petition. If transactions can be diagramed and supporting evidence provided showing where the money came from, the chances of satisfying USCIS should be greatly enhanced.

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E-2 Visas May be Available to Israelis by End of 2015

On June 11, 2012, President Obama signed legislation that would add Israel to the list of countries eligible for nonimmigrant E-2 treaty investor visas. This was a substantial positive development in the creation of stronger commercial ties between the United States and Israel. The E-2 visa should enhance and facilitate economic and commercial interaction between the United States and Israel. We have been in a three-year holding pattern, though, waiting for the two government to end their “visa crisis” and end the restricted issuance of visas.
The Current Situation: Waiting on Israel

The E-2 visa is treaty-based and requires a bilateral agreement for implementation. This means that Israel and the United States both need to authorize reciprocal rules for the issuance of investor visas. Absent a reciprocal visa that grants equivalent rights to United States citizens, the conditions of the treaty-based E-2 visa cannot be met and Israelis are not eligible for E-2 visas.

We may see E-2 visas for Israelis before the end of 2015

The Knesset Interior Committee approved a landmark visa decision August of 2014, allowing for US citizens to receive investor visas in Israel on the one hand, and for Israeli citizens greater access to USA E-2 investor visas on the other.

Through a reciprocal agreement with US officials, the move allows US citizens to obtain visas to invest and conduct business in Israel, and vice versa. The visa pact is aimed at encouraging economic growth in both countries and strengthening relations between the two.

An inter-ministerial team led by Interior Minister Gideon Sa’ar (Likud) found that there is a need for the provision of economic and social investor visas to citizens of the United States.

Granting the visa would allow the citizens of Israel and the United States to make joint investments as well, and encourage and develop economic investment in the Israeli economy, as well as increasing the number of employment opportunities in Israel.

The Israeli investment visa allows US citizens to stay and work in Israel for as long as needed for the investment, along with any essential employees and family.

E-2 visas are a more flexible and outcome-certain option for Israeli emerging and mid-stage businesses

We expect the E-2 visa to be very popular with Israeli technology companies, banks and services companies seeking to send executives, managers and essential employees to the United States. So much confidence in the American system has been lost because of overly harsh and unpredictable outcomes with L-1 intracompany transferee visas. In every sector in Israel, you can hear industry leaders questioning a relocation to the United States because of uncertainty in the visa process. Israelis being eligible for E-2 visas will to a great degree resolve those concerns, as E-2 adjudications are done at Embassies and Consulates abroad where American visa officials are instructed to be “flexible, fair and uniform” in adjudicating E-2 visa applications.

The necessary administrative pieces are already in place at the U.S. Embassy

Once both countries are in a position to issue treaty investor visas to the other country’s nationals, the United States Embassy in Tel Aviv will be able to issue E-2 visas to Israelis. The staff at the Embassy is in a state of readiness to adjudicate E-2 visas, having acquired extensive experience granting E-2 visas to Israelis who hold passports from countries that have E-2 treaty investor visa programs firmly in place.

The United States Embassy in Tel Aviv will issue a press release as soon as the United States and Israel have agreed to the precise terms and conditions for issuing E-2 visas, as well as an Israeli equivalent visa for American citizens.

Business opportunities will increase in both countries

We hope to see the Israeli government prioritize creation of an Israeli visa that is equivalent to the E-2 visa in the coming two months. Making E-2 visas available to Israelis will encourage cross-border transactions, grant Israeli companies more access to United States markets, and enhance scientific, technology and broader business ties between the two countries. On the American side, an infusion of investments by Israeli companies into the economy will directly and indirectly induce jobs. Israeli companies will benefit from being able to access consumer markets in North and South America. For both countries, a treaty investor visa coming onto the scene for Americans and Israelis will be a win-win deal. And E-2 visas will give entrepreneurial ventures in Israel — particularly in the technology sector – a visa process that is more transparent and predictable.

We will continue to provide updates on the status of E-2 visas for Israelis as more information becomes available