South Africans in the UK are very surprised to learn that they are not allowed to use their South African Debit and Credit cards while living abroad.
Unfortunately, for South African expats, the South African Reserve Bank (SARB) have control over the free movement of South African wealth using Exchange Control. South Africans are allowed to send Rands abroad, however, the South African Reserve Bank (SARB) and the South African Revenue Services (SARS), both govern this process. In this regard, the SARB differentiates between South Africans living abroad and South Africans simply travelling overseas.
The SA Reserve Bank and Exchange Control
The SA Reserve Bank Handbook on Exchange Control, Section H is very clear on the rules of using your South African credit and debit cards abroad. In the calendar year you depart South Africa you may, subject to prior approval, use your credit card up to and until 31 December of that year. No further use, in the following year, will be allowed unless you are due to return to the country at the end of the year.
Persons in contravention of this rule can face a SARB penalty as high as 40% of the irregular spend. The funds that have been spent irregularly abroad will have to be brought back and transferred from foreign currency funds, into the person’s South African current or savings account. The credit card will be canceled by then.
There is no automatic penalty regime, and the initial inquiry will normally be sent via your Credit Card Company or South African bankers. You will only receive the nasty warning if you kept your bankers informed of your new FICA address. Using the excuse that the bank sent it to an old or invalid SA address will not fly.
Claiming innocence because your personal banker couriered your card abroad, was also rejected by SARB.
The core rules, restricting the use of SA bank cards, have been applicable for some seven or more years yet the credit card rules have been in the guidelines for more than a decade or two. The said rules, also forbid the use of local cards to play online lotto or to participate, as a South African Exchange Control resident in online gambling.
Temporary Abroad vs. Living Abroad
Temporary abroad is a very wide definition but clearly excludes South Africans outside South Africa while on a holiday or business trip. It is also important to note that the SARB, SARS and SA Home Affairs (Visa and Passport) rules are not aligned. If you own the holiday apartment, you may be living temporarily abroad. In terms of the SARB rules, a person earning foreign currency while physically aboard, albeit for intermittent but regular short periods, may also be temporary abroad.
The word temporary do not refer to a length of time, but, for example, refers to a South African able to stay abroad, having not yet formally emigrated, for whatever reason.
South Africans spending an entire European Summer outside South Africa, staying in self or trust owned properties, are clearly deemed to be temporary abroad. A South African on a six months cruise around the globe can also safely argue that he/she is on holiday.
As always, Ignorance is no defence
Ignorance on your or your bank’s part cannot is not a defence or excuse, and basing your defence case on your banker’s failure to correctly apply the rules, has failed many South Africans.
Where a South African bank or bank branch sent you the card to your foreign address, it is not a valid excuse to blame the banker, argues SARB’s Financial Surveillance team. In fact, past experience suggests it may complicates your case, resulting in a complete denial of the penalty waiver application. In a recent case, SARB advised the delinquent South African to approach his bankers for compensation or a contribution to the penalty charged.
Unfortunately, branch advisers and personal bankers are often not trained to grasp the consequences of the South African Exchange Control Rules applicable to South Africans living abroad.
Must I cancel my South African bank cards, while living abroad?
No, you need not cancel your South African credit and debit cards. You may continue to use your card within CMA (Common Monetary Area), and your card will remain current and valid as you are allowed to use your cards while in South Africa, or for online purchases delivered to a South African address, provided the import duty and VAT on importation is duly settled.