Sending money into and out of South Africa has been a complicated affair for a while now. Recently, 1st Contact FX has been in discussions with the SARB to try and find ways for clients to enjoy a more transparent, deregulated market.
In 2010, the SA Reserve Bank started to relax exchange control in terms of the amount of money that individuals could send from South Africa legitimately and without penalty. It created a vibrant demand for forex brokers to enter the South African international money remittance market. This explosion of brokers started to have an effect on the banks in that many clients realised that there is a genuine value-adding alternative to using one’s bank for foreign exchange and international money remittance.
In 2011, the SARB then conducted an industry audit to try and understand all the different broker models in the marketplace, and how these brokers were trading client funds. And in February 2012, they dropped a bombshell, by presenting findings and suggesting remedies that would effectively smash the brokers out of the market and once again allow the banks to totally dominate this market space. The banks were effectively pressurising the SARB to use archaic legislation to take competition out of the markets – to the ultimate detriment of private clients.
Consequently, a group of intermediaries formed an association. Their objective was to engage with the SARB to try and ensure that the playing field would be levelled, and that the clients would continue to enjoy the benefits of a more transparent and deregulated market. 1st Contact Forex in South Africa was at the forefront of these discussions and the proposal that was submitted to the SARB before they made their final rulings.
On 21 September 2012, the ruling was made public. It is currently under review with our legal department, to try and interpret what seems to be a fair document but with some peculiar ambiguities. In summary: we are compliant with the new rulings, so it’s business as usual.
Please be aware that whilst the SARB has relaxed the allowances in terms of amounts, their Financial Surveillance Department (FSD) has gone the other way and is tightening its reporting and disclosure requirements. It is very advisable when moving funds of a capital nature INTO or OUT of South Africa to make contact with us to discuss and understand your exchange control obligations. With this step under control, moving money across border becomes very simple.