The draft regulations, published in April 2026, have drawn attention for their broader exchange control reforms, but little focus has been placed on the potentially far-reaching consequences for local representatives of foreign-controlled entities who will be personally responsible for the business to comply with South African exchange control regulations.
This responsibility placed on individual managers or controllers of a foreign-controlled business’ branch or subsidiary in South Africa, or on those taking instruction from abroad, could extend to local directors, financial directors or other persons exercising control over the South African operations.
In essence, the proposals applicable to foreign-controlled entities are a “deeming provision” aimed at closing the gap that historically made it possible for such entities to work around exchange control regulations through offshore control structures.
Proposed Reserve Bank Regulations Place Responsibility on Individual Managers in South Africa
If finalised in its current form, the regulations would impose far greater accountability on local representatives of foreign companies. If you are in South Africa but your reporting line is outside of the country, it will no longer be a defence to argue that you are just following instructions from abroad. You will be held personally responsible for ensuring compliance with the exchange control regime.
Under the proposed framework, local managers or controllers would be subject to the same duties and obligations applicable to managers or controllers of locally controlled South African entities. This is similar to how a representative employer or representative taxpayer may be held accountable for the compliance obligations of a foreign enterprise or a foreign trust.
Levelling the Playing Field for Foreign-Controlled Businesses
The regulations will put foreign businesses and enterprises doing business in South Africa, regardless of where the ultimate control resides, on even keel with how businesses resident within the country are treated for exchange control purposes.
Where control of any business vests in a person established outside South Africa, any transaction with a branch or subsidiary of the business must be treated as if it were a separate resident entity. Similarly, a South African business controlled by a person abroad, must itself be treated as a resident entity for regulatory purposes.
This represents a clear move toward stronger enforcement, greater accountability, and closing of perceived loopholes for foreigners and foreign companies trying to do business in South Africa while being able to sidestep exchange control regulations on strength of the argument of offshore control.
Why a Modernised Approach to Managing Cross-border Flows?
The proposed changes form part of a broader effort by National Treasury and the South African Reserve Bank (SARB) to modernise South Africa’s exchange control regime by replacing the 1961 framework.
Importantly, the rules are not intended to impose additional burdens on foreign businesses, but rather to ensure parity. A foreign-controlled business operating in South Africa will be treated no differently from a local company when it comes to compliance obligations.
The move also appears to respond to situations where businesses or persons were found to be in breach of the exchange control regulations but could not be held accountable as they argued they are governed by foreign law and as such the regulations did not apply to them.
A Move Towards International Best Practice and Risk-based Regulation
The draft regulations align with broader international trends toward enhanced transparency, accountability and monitoring of cross-border financial flows. It covers foreign currency, gold, crypto assets and broader capital movements, imposing stringent restrictions on the purchase, sale, lending, declaration and export of such assets. Non-compliance may result in severe sanctions such as forfeiture to the state.
The draft framework seeks to align South Africa’s exchange control framework with recommendations from the Organisation for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF), aimed at combating money laundering, terrorist financing and the proliferation of illicit financial flows.
In a joint media statement, National Treasury and SARB notes:
“The amendments signal South Africa’s readiness to modernise and adopt a ‘positive bias’ approach to managing cross-border capital flows through fewer transaction pre-approvals, a focus on reporting, the surveillance of high-impact and high-risk cross-border transactions, and the combating of illicit financial flows.
This shift will align South Africa with international best practice, while also managing various risks using a risk-based approach and existing macroprudential tools.”
Stern Message to Foreign-Controlled Businesses in South Africa
Foreign-controlled businesses operating in South Africa, must take note that, going forward, conducting business in the country may carry the same exchange control responsibilities and obligations expected of locally controlled entities, no matter where ownership or control resides.
Managers and controllers of foreign branches and subsidiaries in South Africa should pay particular attention to the proposed framework, as the regulations seek to place direct compliance responsibility on them as local office bearers.
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