If you plan to deposit anything less than 1 Million ZAR, then just enter your initials and surname, the 16 digit card number, expiry date, CVV number, amount you want to deposit, and click ‘deposit now’. That is, as long as you are on a secure connection and registered with a broker you trust.
Due to foreign exchange controls (FEC) and regular changes to legislation it can be harder if you are depositing larger sums, but you run into most trouble when trying to transfer over 10 Million ZAR per year.
Discretionary Travel Allowance – Under 1 Million ZAR
To apply for the R1 million discretionary travel allowance, you must complete an MP 1423 form, available from all authorised currency dealers and Forex desks. No tax clearance certificate is required. Previously, this allowance was strictly a travel allowance. It is important that you follow the tax law for South African residents who trade Forex.
On October 27, 2011 the annual R1million discretionary allowance law changed to include foreign investments. This is therefore your best option for funding an offshore Forex account. It’s straight forward and does not need SARS clearance. If however R1 million is not enough, then you will need clearance and full approval.
Depositing over 10 Million ZAR per year?
In order to get permission for the transfer of up to 10 Million ZAR per year, your bank will need to submit an application to the Financial Surveillance Department of the South African Reserve Bank for approval. A Tax Clearance Certificate is needed in order for this application to be complete.
If you are planning to transfer large amounts, it may well be worth setting up an offshore bank account first and then funding your Forex and offshore investment accounts from there. It does mean that if you want to open additional accounts with other brokers you will not be required to repatriate the funds and then go through the process of getting clearance and transferring the funds out again. Not only is this an onerous and costly process but you are also opening yourself up to possible additional currency risk.
KYC – Know Your Customer
Banks and financial institutions globally have signed up to a program called KYC. It is a law set in place to stop money laundering by anonymous actors. When you sign up for a Forex trading account, and before you will be allowed to make a deposit, you will need to complete you KYC documentation. It is very easy. It requires you to submit:
- A colored copy of a valid national ID – this can be a passport or drivers license. A photograph of the ID will work perfectly.
- A recent utility bill (e.g. electricity, gas, water, phone, oil, Internet and/or cable TV connection, bank account statement) issued in the past three months and confirms your registration address.
In order to fund your offshore Forex account, first ensure that you use the correct and most appropriate channels to avoid contravening South African Foreign Exchange legislation. Once you have chosen the correct channel then choose how you are going to fund the account depending on the amount of money you plan to transfer and what your specific requirements are.