On 4 January 2021 the Financial Surveillance Department of the South African Reserve Bank (FinSurv) issued a circular on the removal of the so-called “loop” prohibitions contained in the Currency and Exchanges Manual for Authorised Dealers (the Manual), wherein are set out the approved practices as set out by for use Authorised Dealers, i.e. the commercial banks.
At the outset, it must be noted that (a) the basis of what is allowed or not allowed under the Manual is what is contained in the Exchange Control Regulations, 1961, and the discretions given to FinSurv and the Minister thereunder, but nowhere in those regulations does one find the word “loop”, or any prohibition against such a “loop”. This is entirely an interpretation of the prohibition in regulation 10(1)(c) of those regulations (the Regulation) that a South African resident may not, without approval, export capital or the right to capital from South Africa.