If you’re preparing for your emigration from South Africa, one of the most important things to consider is how you plan on moving your money out of South Africa once you’ve left. Any international move brings with it a range of financial considerations and commitments, so having a reliable, cost-efficient means of managing currency payments can make a big difference on your pocket and your stress levels. If you’re exchanging a sizeable nest egg to live on, even small margins in the exchange rate can have a positive impact on your finances.
International money transfer from South Africa
Here’s what you need to know about international money transfers from South Africa and what to look out for in a foreign exchange provider once you’ve left the country.
Who can deal in foreign exchange in South Africa?
All financial transactions that cross the borders of the Republic fall within the purview of our central bank, the South African Reserve Bank. This Bank keeps an eye on all money changing hands across borders, to ensure it is not used for illegal purposes and that it is properly declared for tax purposes, making sure that individuals do not move out of South Africa more money than is permitted by annual exchange control allowances.
To ensure that international money transfer transactions are trackable, Exchange Control Regulation 2(1) expressly prohibits foreign exchange transactions other than through an Authorised Dealer. This means that no person other than an authorised dealer appointed by the South African Reserve Bank, may buy or borrow foreign currency or sell or lend any foreign currency to any person. That’s right, it’s actually illegal to buy foreign currency off friends or family.
Let’s take a step back. What is foreign currency?
Any currency other than that which is legal tender in South Africa, except for the currencies of Lesotho, Namibia, and eSwatini. It includes in its definition: any bill of exchange, letter of credit, money order, postal order, promissory note, travelers’ cheque, or any other instrument of foreign exchange.
To deal foreign exchange on its behalf, the South African Reserve Bank extends powers to three types of Authorised Dealers:
Authorised Dealer: authorised by the Financial Surveillance Department to deal in all foreign exchange transactions.
Restricted Authorised Dealer: authorised by the Financial Surveillance Department to deal in foreign exchange by means of a locally issued credit card for permissible cross-border transactions.
Authorised Dealer with limited authority: (aka ADLA) means an Authorised Dealer in foreign exchange with limited authority, including Bureaux de Change, independent money transfer operators, and value transfer service providers, who are authorised to deal in foreign exchange transactions as determined by the Financial Surveillance Department.
These ADLAs fall into four categories:
Category One:
May perform travel-related transactions only.
Category Two:
May perform travel-related transactions.
Facilitate transactions within the SDA of R1 million per applicant/calendar year.
Offer money remittance services through external money transfer operators.
Category Three:
Independent money transfer operator
Value transfer service provider
Facilitating transactions not exceeding R5 000 per transaction per day within a limit of R25 000 per applicant per calendar month.
Category Four:
A combination of the services provided by Category Two and Category Three.
Foreign exchange brokers/treasury outsourcing companies are authorised by the Financial Surveillance Department to act as intermediaries meaning that client’s foreign exchange transactions must be settled through an Authorised Dealer.
How are you going to move your money out of South Africa?
As you’re unlikely to have completed the process of tax emigration just yet, you’re still considered a South African tax resident even if you’re living abroad. Tax residency can only be broken once you’ve met a number of conditions as determined by the South African Revenue Service. This means that you’ll have the following avenues through which to move money out of South Africa:
- Single Discretionary Allowance: Adults (persons aged 18 and older) can transfer abroad up to R1 million per calendar year, without a tax clearance certificate.,
- Foreign Investment Allowance: Transfer abroad up to R10 million per calendar year with prior tax clearance.
You will need to be able to show that your tax affairs are up to date, as well as verify the source of the funds to be transferred.
Read more about South African exchange control limits, here.
Why you need to partner with a foreign exchange specialist if you’re moving money regularly from South Africa:
It makes sense to use a dedicated foreign exchange specialist who is fully capable of giving you a solution that is personalised to suit your specific needs.
We call this Your Personalised Financial Emigration Plan™ and it takes into account your exact objectives and personal circumstances, finding a solution to move your money out of South Africa in the most time-efficient, cost-effective manner.
- Working with an expert can play a massive role in managing your stress, while saving you money (and time!) in the long run.
- Aside from managing foreign exchange transfers and cross-border payments, a reputable forex specialist can assist if you wish to begin the foreign exchange process ahead of landing in the country you’re relocating to.
- Because exchange rates can significantly affect how much money you receive, working with a forex specialist means you’ll be able to convert funds ahead of time and hedge your risk, thereby reducing the risk of an intervening political, economic or social development negatively impacting your transactions.
After your move: addressing your cross border financial requirements
Even once you’ve settled in your new country, you’re still likely to have financial affairs back home, which means cross-border payments and making international money transfers. That’s where FinGlobal can help. Along with fixed, transparent fees, we provide value-for-money service that is quick and hassle-free.
Take a look at our credentials, and what our clients have to say and then leave us your contact details so we can be in touch to discuss Your Personalised Emigration Plan™