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EB-5 Question of the Week: Is my capital contribution affected by the recent bank failures?

Earlier this month two banks in the United States – Silicon Valley Bank and Signature Bank – failed. Silicon Valley Bank (SVB) provided banking services to companies in the technology sector and became the largest bank to fail since the bank failures of the 2008 financial crisis. Signature Bank was also the third largest bank failure in U.S. history. These bank failures have caused panic and turmoil in the banking sector in the United States. That said, EB-5 investors that have invested their funds with experienced regional centers can rest assured that their funds are safe from these bank failures by virtue of being insured by the Federal Deposit Insurance Corporation (FDIC).

The EB-5 program allows foreign investors and their qualifying dependents to obtain U.S. Green Cards with an investment of $800,000 in a government pre-approved real estate project. The investment of $800,000 is returned to the family after approximately five years of benefiting the U.S. economy. Investors participating in the EB-5 Regional Center Program choose a project hosted by a regional center, which is a private or public economic unit designated by the United States Citizenship and Immigration Services (USCIS) with the goal of promoting economic growth in the United States. The regional center investment route allows investors to benefit from a passive investment in a project sponsored by a regional center and take advantage of indirect job creation.

While the EB-5 program mandates that an investment must be “at risk,” there are certain steps that investors can take to mitigate their investment risk, such as by working with a reputable and experienced regional center. The recent U.S. bank failures have shed light on the significance of working with the right regional center. In this climate of uncertainty for consumers, experienced regional centers have reached out to their existing investors to assure them that the bank failures have not impacted their investments as investors’ funds are 100% protected by FDIC insurance prior to deployment into the chosen project.

FDIC is an independent agency created by the U.S. Congress to maintain stability and public confidence in the financial system of the United States. FDIC insures deposits, examines and supervises financial institutions, makes large and complex financial institutions resolvable, and manages receiverships.

Top regional centers establish strict criteria for depository banks to meet prior to working with them in holding their investors’ capital contributions. One such requirement is that the depository banks participate in the Insured Cash Sweep (ICS) network, which provides 100% FDIC-insurance coverage on the capital contributions. Prospective EB-5 investors can reduce the risk of losing their capital contribution by working with a qualified regional center.

Our director at The American Legal Center has over a decade of experience in the EB-5 industry and has built long standing relationships with top regional centers. We have assisted hundreds of families in applying for their U.S. residency via the EB-5 program. If you are ready to start your migration journey with The American Legal Center of Dubai, contact us today for more information.

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