Impact on Russian Investors Due to U.S. Sanctions?

Since the collapse of the Soviet Union in the early 1990s, the United States has welcomed a steady flow of immigrants from Russia – many settling in cities like Miami, New York, Denver, Los Angeles and Baltimore.

Potential Russian EB-5 investors, while prosperous in their home country, choose to leave when government corruption and unpredictability become a factor.  These investors recognize that Russia cannot provide a suitable investment environment to protect their wealth, only economic uncertainty. This is evident with Russia’s recent annexation of Crimea, which has contributed to the Russian ruble and Russian stock market plummeting in March of 2014. The $500,000 EB-5 investment now costs up to 50% more in rubles than it would have just a few years ago. Fortunately, many wealthy Russians who qualify for the EB-5 Visa maintain dollar and/or Euro currency accounts outside of Russia.

With the recent U.S. sanctions in place, can Russian investors expect other uncertainties during the EB-5 investment visa process?

On its face, it appears that unless the EB-5 investor is part of President Vladimir Putin’s “inner circle”, most EB-5 clients will not be directly affected by the sanctions.  However, although the sanctions appear insignificant to most individuals in Russia, recent sanctions against Bank Rossiya for example, prompted Standard & Poor’s (S&P) rating agency to downgrade its outlook for the lender from stable to a negative rating.  As a result, the S&P foresees a deterioration of the bank’s future business and financial profiles. Further, Bank Rossiya can no longer engage in dollar-based transactions, and western banks will not be able to engage in business with them.  This has created immense economic uncertainty in the country. 

The sanctions on Bank Rossiya were meant to directly impact Putin and other top government officials. The actual ramifications to potential investors is beginning to become evident. Economists predicted correctly that the crisis over Crimea would tip the Russian economy into a recession in 2014, which should serve as a push to potential EB-5 Investors to leave Russia sooner.

For more information on obtaining your EB-5 Visa, contact Washington, DC EB-5 lawyer Kyle Barella.  Our office is equipped to handle EB-5 clients in English and Russian.

Kyle Barella - General Counsel, P.C. | +1 (202) 621-3198 | kbarella@barellalaw.com | www.eb5investmentlaw.com | www.generalcounsellaw.com


The Information contained in this blog is for information purposes only, and should not be considered legal advice for any individual case or situation.  The information provided is not a substitute for consultation with an attorney.  No attorney/client relationship is created by the information contained herein.