It really isn’t a secret that some parts of the world operate a lot differently than others, especially in terms of finances. Take South Africa for example. Although a booming nation in comparison to others sharing the same continent, their financial regulations can sometimes get a little out of hand. Case in point: Their stance against Forex trading.
It isn’t necessarily illegal to trade with Forex in South Africa, but with different limits, workarounds and sporadic pieces of legislation complicating the issue, it isn’t exactly easy either. That said the FSB regulates Forex brokers and we feature many of the better ones here.
The Deal with South African Trading
Funding a broker account is fairly straightforward in South Africa, at least for a trader. It’s actually the broker that’s going to transfer and mix and match funds to keep everything as fluid as possible. For those looking to fund their Forex accounts directly, however, there are a few hoops to jump through.
As of 2010, it became easier for South Africans to legally move more of their money to offshore accounts. Obviously this makes funding a Forex account possible. But there is still a limit. Each South African citizen is only given an allowance of 4 million Rand for exchange. That is still a lot of money, though; about $490k USD. So it’s not as if the SA government is stifling investing on a personal level. Larger companies may have issues, but they also have the lobbying funds to get through some of the aforementioned workarounds.
Another way to get funds offshore is to apply individually for a discretionary foreign currency allowance, available in an amount up to 1 million Rand. This, along with the initial 4 million, must be cleared by the South African Revenue Service (SARS). Of course, this means filling out a lot of paperwork, like an MP 1423 form for the 1 million travel allowance, and making sure all your tax forms are up to date.
The real catch here is how you move the money; i.e. wire transfers, credit cards, etc. For a credit card transaction going offshore, the amount drastically cuts into that 4 million, only allowing 20,000 Rand per transaction.
The easiest way to fund a Forex account offshore is to simply use that 1 million discretionary allowance. Once approved for the allowance, you need no further approval to invest it offshore. If you need to invest more, that’s when you’ll need approval from SARS.
Also, be very careful to make sure you’re going through the proper channels. While funding your Forex account is much easier in recent years, money can still become lost very easily and you may never see it again.