What business can I start where Banks will allow me to send money overseas multiple times monthly?

[Sly21C]

So a while back I was pondering an idea of how I can profit from bitcoins using arbitrage trading. I did some research, and found a way to make a little bit of money almost consistently with an average risk.

I registered myself at a foreign bitcoin exchange. They requested a photo of my ID document, proof of address and a selfie. After two rejections, they approved. This meant that I could send the bitcoin foreign exchange fiat currency, i.e. US$, from my South African Standard Bank account.

I sent the bitcoin foreign exchange R15k from my Standard Bank account, converted into US$. After about 4 days, US$1100 reflected at my bitcoin foreign exchange. I bought bitcoins utilizing all the US$1100. After a few minutes the transaction was approved at the bitcoin foreign exchange. I immediately sent bitcoins to my Luno account (Luno is a South African based bitcoin trading exchange) from the bitcoin foreign exchange. After over an hour, Luno received the bitcoins. I then sold all the bitcoins for Rands at Luno. I then transferred all the monies, including the profit, to my Standard Bank account with the intention to repeat the process again.

I made a profit of about R513, after all the expenses and costs. That's a 3.3% profit, which is good enough for me since one day I can, let's say, use R50k and make a R1.6k profit a week and R6.6k a month (the whole process of sending fiat money overseas, converting it into bitcoins & withdrawing to my bank takes about 5 days). That's the best case scenario though, I'm aware I can lose a lot of money, but I'm willing to risk R15k.

I tried repeating the transaction last week, I couldn't because of Standard Bank's EAP monthly limit. My limit is R15k, and if I wanted to send another R15k then my EAP limit must be increased to R30k, which means my account must have a balance of R30k before they can change the limit.

My question is, is there a business or type of business whereby I can transfer money overseas multiple times per month? Say, R15k a week or four times a month (R60k a month)? Or more? Is there a type of business whereby there's no limit to the number of times and the amounts of money that can be transferred overseas? The problem of doing it myself is that the SARB allows citizens a discretionary amount of R1 million annually to be sent overseas without approval. They also allow up to R10 million annually, but only if you get permission from SARB and have a tax clearance certificate from SARS.

I know I can try Absa bank or FNB as they don't have this EAP limit Standard bank has. My issue with that is I will still face the same problem of a limit of R1 million if this thing works, or even R10 million if it gets to that . So is there perhaps a business, maybe an import/export type of business, that I can try? If it's imports then I could be importing bitcoins (digital assets)? I'm just putting it out there.

Thanks

[Basment Dweller]

Exchange controls apply to businesses as well so I don't thing you are solving this problem by creating a business that sends money overseas, everything still needs to go through the reserve bank etc.

You could get your bank to increase your EAP but that also doesn't solve the problem of sending larger volumes through the bitcoin exchange because the exchange also throttles the amount of money you can exchange from fiat into bitcoin. Plus you have the added problem of KYC (know your customer) details which you provide the exchanges when you sign up, so reserve bank knows when you are moving large volumes of Fiat currency if that were even possible.

[navitas]

The number of transactions involved will surely trigger the banks to monitor what's going on. Opening a business bank account in another country might help but you will still have to incur all the costs involved doing so but it might pays in the end because offshore business bank accounts normally allow a higher transaction amount for business purposes.

[SimonH3]

Also interested in this, I've done a few transactions this way... Have you managed to find any more info on how to go about it?

You would be limited by the SARB foreign limits but the ROI is still decent if doing R11 million per year... SARB may monitor the transactions but there is nothing illegal going on to my knowledge? This cannot be considered as a Loop Structure as the inward bound Bitcoin transaction is not officially monitored/regulated by SARB. Possibly someone with more in depth knowledge in this area may know more info?

Thanks

[Sly21C]

Apologies for the late response everyone...

Exchange controls apply to businesses as well so I don't thing you are solving this problem by creating a business that sends money overseas, everything still needs to go through the reserve bank etc.

You could get your bank to increase your EAP but that also doesn't solve the problem of sending larger volumes through the bitcoin exchange because the exchange also throttles the amount of money you can exchange from fiat into bitcoin. Plus you have the added problem of KYC (know your customer) details which you provide the exchanges when you sign up, so reserve bank knows when you are moving large volumes of Fiat currency if that were even possible.

I managed to increase the EAP limit, but I've decided I'll use another bank as Standard Bank doesn't work for me in what I'm trying to do. You're correct, exchange controls applies to both business and individuals. I don't mind if SARS and SARB know all my money movement activities. I'll pay all required taxes and follow SARB's conditions and regulations. I don't want to do anything illegal, but I'm open to doing things differently provided it's legal.

Starting a business does help though as more money can be transferred overseas.
See link and quote regarding transfers overseas for individuals https://www.resbank.co.za/Regulation...ndividuals.pdf

3.1 Single discretionary allowance
3.1.1 A single discretionary allowance within a limit of R1 million per calendar year is available to all South African residents who are 18 years and older, and in possession of a valid green bar-coded South African identity document or smart identity document card. This dispensation may be used for any legitimate purpose (including for investment purposes abroad as well as the sending of gift parcels in lieu of cash excluding gold and jewellery) at the discretion of the individual without any documentary evidence having to be produced to the Authorised Dealer, except for travel purposes outside the CMA, where certain prescribed documentation has to be produced.

3.6 Foreign capital allowance
3.6.1 Limits
A foreign capital allowance may be availed of through an Authorised Dealer, which may be transferred to a foreign currency account with a local Authorised Dealer or invested abroad, within a limit of R10 million per calendar year per individual who is in possession of a Tax Clearance Certificate and green bar-coded South African identity document or Smart identity document card and is 18 years and older.
The funds to be transferred must be converted to foreign currency by an Authorised Dealer.
The Financial Surveillance Department will consider applications by private individuals via an Authorised Dealer to invest in different asset classes offshore in addition to the abovementioned allowance. Private individuals wishing to avail of this dispensation must first approach SARS to obtain a Tax Clearance Certificate obtained via the SARS Tax Compliance Status System, in the prescribed format, which must accompany their application to the Financial Surveillance Department for consideration.

See link and quote regarding transfers overseas for businesses https://www.resbank.co.za/Regulation...20Entities.pdf

4. Capital transfers
4.1 Outward foreign direct investments for private, public and listed companies
(a) Conditions applicable to foreign direct investments
South African registered private, public and listed companies (excluding sole proprietorships, partnerships, close corporations and trusts), as well as mandated state owned enterprises as defined in Schedule 2 of the Public Finance Management Act, 1999 (Act No.1 of 1999), are allowed to transfer capital for foreign direct investment purposes to any country outside the CMA, subject to certain conditions outlined herein.
While there is no monetary limit on the amount that can be transferred offshore, requests for investments not exceeding R1 billion per entity per calendar year must be submitted to an Authorised Dealer who will assesses the application for compliance with the stated conditions for approved outward investments.

From what I've read so far, I think businesses can transfer more compared to individuals as they're severely restricted.

My question regarding transferring and importing money back is this....if I transfer R15k and R15.5k comes back into the country (R500 profit), doesn't it mean that I still have the R1 million singe discretionary allowance available to me for a calendar year? Because although I have transferred money overseas, money has come back right? So shouldn't it be a situation whereby I have R1 million left to transfer overseas as opposed to R985k (R1 million less R15k)?

The number of transactions involved will surely trigger the banks to monitor what's going on. Opening a business bank account in another country might help but you will still have to incur all the costs involved doing so but it might pays in the end because offshore business bank accounts normally allow a higher transaction amount for business purposes.

I'll look into opening a bank account overseas, I didn't think about it that way. My knee jerk reaction now is that my operation requires that I send money from RSA to a foreign exchange (or bank account). SARS and SARB will still see my RSA bank account's activities and therefore query?

Also interested in this, I've done a few transactions this way... Have you managed to find any more info on how to go about it?

You would be limited by the SARB foreign limits but the ROI is still decent if doing R11 million per year... SARB may monitor the transactions but there is nothing illegal going on to my knowledge? This cannot be considered as a Loop Structure as the inward bound Bitcoin transaction is not officially monitored/regulated by SARB. Possibly someone with more in depth knowledge in this area may know more info?

Thanks

Seems you created a new account just to comment on this thread?

Nope, there's nothing illegal from what I've read so far. Yep, a limit of R11 million is worth it compared to R1 million which is not worth it. That's why I am considering a business whereby I can transfer as much as R1 billion overseas per calendar year. But I still need to do more research as far as conditions are concerned.

See a link (page 16) and a quote regarding the loop structure according to SARB https://www.resbank.co.za/Regulation...20Entities.pdf

South African business entities must be aware that they may not enter into a transaction or a series of transactions (Transactions), the purpose and/or effect of which is to export capital, directly or indirectly, from South Africa in contravention of the permissible dispensations granted to entities within the Authorised Dealer Manual. These Transactions, which invariably contravene the Regulations entail, among others, the formation by (or at the instance of) a resident entity of an offshore structure which, by means of a re-investment into the CMA, acquires shares or some other interest in a CMA company or CMA asset (‘loop structures’).
The above-mentioned Transactions result in or have the potential to result in the direct or indirect export of capital abroad by the resident entity to the non-resident company or other relevant non-resident trust or entity for the ultimate benefit of a resident, of dividends including dividends arising from increased profits, revenue reserves or capital reserves accruing from the introduction of carefully selected CMA growth assets to a CMA company.
Outward investments that involve the creation of an unintended loop structure require prior approval from the Financial Surveillance Department. As an exception, South African private, public and listed companies are, on application to their Authorised Dealer, permitted to acquire from 10 to 20 per cent equity and/or voting rights, whichever is the higher, in a foreign target entity, which may in turn hold investments in and/or make loans to any CMA country. This dispensation does not apply to foreign direct investments where the South African company on its own or where several South African companies collectively hold an equity interest and/or voting rights in the foreign entity exceeding 20 per cent in total.

From the above, it's doesn't look like there's an issue since we wouldn't be acquiring shares of Luno via a foreign entity. So this is above board.

Have your transactions (money transferred overseas) exceeded R1 million? If so, did you seek permission from SARS or SARB to send more money? If not, are you planning to do that?

[tim13rosso]

Progress on idea

Hey there Sly.

Just happily stumbled across your post while looking for answers to my problem.

I'm in essentially the exact situation, and though I've found a couple of ways to cut down on fees, it's the discretionary allowance that's the concern once again. Have you had any luck on applying for the 10m allowance with your clearance, or on exploring your ideas on business?

[PlatinumWealth.co.za]

This is quite insightful @Sly21C

[Greig Whitton]

Nope, there's nothing illegal from what I've read so far. Yep, a limit of R11 million is worth it compared to R1 million which is not worth it. That's why I am considering a business whereby I can transfer as much as R1 billion overseas per calendar year. But I still need to do more research as far as conditions are concerned.

South African companies can only engage in cross-border trade with fiat currency. Cryptocurrency inflows won't be recognised as legal tender, will be reported to the Reserve Bank (Luno is working closely with SARB), and the funds will be blocked when withdrawn to your local bank account.

[jjziets]

Hi. DId you find a way other than the FIA to send out funds? SARS/SARB is declining my applications at this stage for no clear reason. I even have a compony that has a foreign back account but that seems to be a dead end also as i can't use the FDI for this. I tried talking to SARB but they just say "The Financial Surveillance Department is, from an exchange control point of view, unable to approve any transactions of this nature. " and that is the end of it. Im running out of ideas

[jjziets]

Low risk? Wait until you do this more frequently. The price of dollers-euro to rand can shift dramatically eating all your profits. Not to say btc will stay stable. I use to do arbitration when profits was +5% but those days are gone now that bigger players have entered.

[sherinemuasher]

Well i would like to implore you to try any business that does not involve that much money since it puts the rest of your cash at risk if you are going to make a lot of transfers at a time. This just means that there is going to be a way for us to top it up with your cash as well. I do think that you need to see the way it is. There are some others who need to pick up the pace and see the value of it as well. You should really take my advice.

[heathermalone]

Check out other banks. Transaction limits in banks are mostly based upon the funding you do. Ensure your kyc is done properly and approach their client support to get a clear picture about this.