From a young age, we are conditioned to handle our finances with utmost care. Living in a country where administrative battles with service providers, governmental departments and legislators are par for the course, it’s understandable that the sound of a blocked bank account would fill you with trepidation.
We have all heard horror stories about people who have lost money, fallen for scams, been swindled, whose bank accounts have been frozen for some dastardly reason and who have literally been eaten alive by the tax man (okay… that last bit is a bit dramatic, but you catch our drift).
But is a blocked bank account really that dreadful?
Financial emigration won’t freeze your accounts
In truth, a blocked rand account should not intimidate you. Despite what the name implies – if you follow all the correct procedures and your paperwork is up to date, your money will never be blocked. A blocked account simply means that you won’t be able to manage your finances the same way you did when you still lived in South Africa. In fact – your money will now be managed solely by an authorised financial services provider. This fact alone should put your fears to rest. Who better to entrust your money to than an institution regulated by law and managed by people who have financial savvy?
As part of the financial emigration process, you will need to choose one banking institution who will oversee your capital transfers from South Africa to your new country of residence. This institution will facilitate and manage your blocked rand account and exchange control restrictions will apply to this account. This means that you won’t have access to normal banking practices such as internet banking or online transactions with your blocked South African bank account.
But don’t let this scare you – remember that you’ll always retain your South African citizenship and your blocked bank account will not affect the financial liberties and privileges you enjoy in your new home, nor does it require you to liquidate your assets in South Africa.
When would I need a blocked rand account?
A blocked rand account will only apply to people who have financially emigrated (the formal process of finalising your finances in South Africa). Though all South African expats won’t consider financial emigration, there are cases where this is the best route, such as:
- When you want to transfer the proceeds of your retirement annuities to your new home.
- If you’re expecting an inheritance from a relative in South Africa.
To get the best from your blocked bank account, you’ll must declare all your South African assets within the financial emigration application to the Reserve Bank, since the income and / or capital from these sources will be transferred offshore via your blocked bank account. For this reason, at finglobal.com we advise all our clients to play open cards with the tax man. You’ll get the best value from your financial emigration this way, and you’ll avoid future income restrictions.
And that’s it! Feel better about that blocked bank account now? Of course you do. If you want to know more about this, and other financial emigration regulations, let us call you.