You have earned your money. You are entitled to use it at your discretion, including buying an upmarket apartment in a buzzing global city, diversifying an investment portfolio by increasing offshore exposure, or moving funds abroad to hedge against local currency fluctuations.

It sounds straightforward enough. 

But for South Africans, externalising capital as a gift or to invest in foreign property, shares or other assets does not begin and end with having sufficient cash in the bank. Exchange control rules determine how much can be transferred, what approvals may be required and the consequences of not following the rules.

Although South Africa has in recent years been gradually relaxing regulations for sending funds abroad, complying with exchange control rules has not become less important. If anything, the South African Reserve Bank (SARB) is placing increasing emphasis on reporting, monitoring and compliance when capital flow across borders and it is essential to understand the applicable exchange control rules from the outset.

The London Property: Opportunity or Problem?

Consider someone who wants to buy a flat in London. South African residents aged 18 or older have a Single Discretionary Allowance (SDA) to move R2-million abroad per calendar year without prior approval. This can be used at the individual’s discretion for permitted purposes. 

The problem is that R2-million will not go very far when buying property in a market such as London.

According to the UK House Price Index, in June 2026 the average price of a flat or maisonette in London was approximately £431 000.

At that level, a prospective South African buyer will need considerably more than the SDA allows for and different regulatory requirements then come into effect.

When AIT Becomes Part of Compliance

Approval International Transfer (AIT) is an area that deserves particular attention from anyone planning a significant offshore investment.

In addition to the R2-million SDA, for an individual moving between R2-million and R10-million per annum, the rules stipulate that individuals must obtain an AIT Tax Compliance Status verification from the South African Revenue Service (SARS). This status verification result must be provided to an Authorised Dealer before the funds can be moved offshore.

Transferring amounts above R10-million becomes more onerous. As an additional step to obtaining an AIT, individuals must apply to the SARB’s Financial Surveillance Department (FinSurv) for approval. The individual’s Authorised Dealer must submit this application to the SARB and a tax compliance status verification result must accompany the application.

With the average price of a London flat in mind, and depending on the exchange rate, the additional allowance may bring the investment within reach.

Also, note that the SDA does not extend to non-residents in South Africa. They will need an AIT for every rand that leaves the country.

The rules apply to legitimate offshore investment. 

Balancing International Best Practice with a Risk-Based Approach

In October 2025, the international Financial Action Task Force (FATF) removed South Africa from its “grey list” of jurisdictions under increased monitoring. South Africa's delisting followed significant progress in strengthening its anti-money-laundering and counter-terrorist-financing framework.

Earlier in 2026, National Treasury published the draft Capital Flow Management Regulations of 2026 for public comment.

These proposed amendments focus on gaps in the current regulations, provide for new and amended definitions, transitional arrangements, increased penalties, and the removal of any ambiguity regarding the declaration of foreign assets. It also aims to bring crypto-assets within the exchange control framework to address risks and ensure oversight of emerging financial instruments.

The SARB said once the final Capital Flow Management Regulations of 2026 are promulgated, it will replace the Exchange Control Regulations of 1961.

The Consequences of Getting it Wrong

The consequences of contravening exchange control rules are no idle threat.

Violations can result in criminal sanctions and substantial financial penalties. Depending on the circumstances, this can be linked to the value of the property or funds involved. The regulations also allow for the attachment of money or goods connected to suspected contraventions.

There can be significant practical consequences for individuals trying to regularise unauthorised offshore assets or transfers after the event.

SARB states that South African residents seeking to settle exchange control contraventions must make a full disclosure to FinSurv. Applicants may be required to pay a settlement amount ranging from 10% to 40% of the amount involved.

SARB further warns that residents with unauthorised foreign assets who do not voluntarily approach the department may face the full force of the law and, where appropriate, recovery of the full amount of the contravention.

Taxpayers have long been aware of SARS’s increased scrutiny of their affairs, including offshore activities, to ensure tax compliance. However, SARS’s receiving and reviewing of offshore account balances or worldwide income under Automatic Exchange of Information agreements with other jurisdictions, does not confirm that the historical transfer of those funds met SARB’s legal exchange control requirements. 

Moving money offshore without proper prior authorisation or reporting can still constitute an exchange control violation, even if the asset is fully declared for income tax purposes.

How to Address Historical Mistakes 

Not every exchange control problem is due to deliberate wrongdoing. There is a route forward, but the situation should be addressed properly.

In such instances, SARB requires a full and verifiable disclosure, supported by documentary evidence prepared in accordance with the requirements. 

Do not to wait until a problem is discovered by a regulator or bank before seeking advice. 

When it comes to sending capital abroad, there is actually only one rule: understand the rules. 

If you are unsure, obtain appropriate guidance and make sure transfers are structured correctly, with the necessary compliance requirements and approvals addressed before the funds leave South Africa.

Written by Bronwin Richards, Team Lead: Tax Technical at Tax Consulting SA