Offshore accounts are not just for the rich and famous

You don’t have to be a high-flyer to have a foreign currency account or even an offshore bank account. They have become an easily available and relatively affordable option for South Africans who would like to hold funds offshore

As exchange controls have eased over the years, it has become easier for South Africans to take money abroad.

You can take R1 million offshore ­every year as part of your discretionary portfolio, with minimum paperwork required, and you do not have to apply for a tax clearance certificate. You do, however, have to declare the source of funds.

South Africans can also take out up to R10 million a year as part of their investment allowance, although this does require SA Reserve Bank approval and a tax clearance certificate. There are two options:

FOREIGN CURRENCY ACCOUNT

1. This is typically linked to your South African bank account, but allows you to hold major foreign currencies in a transactional or call account. You can also hold more than one foreign currency account. For example, you could have a US dollar and a euro account.

The minimum balance tends to be low and there are usually no monthly fees, although transaction fees ­apply. With some banks, money can only be transferred between your South African account and your foreign currency account, although Absa allows third party payments from its currency account.

This is an ideal solution if, for example, you are going on an overseas holiday and want to start saving to ­protect against a weakening rand. It can also be used for any offshore earnings you may receive.

FNB is the only bank that allows for an online application as part of your online banking profile.

Absa’s foreign currency account is available in the major currencies and can be a transactional account, a call notice account (minimum balance of R5 000) or a fixed-deposit account (minimum balance of R100 000). It allows for international payment in the currency of the account to a third party, although ­instructions have to be given in a branch. An international transfer fee will apply, but there is no currency conversion fee.

The FNB Global account is linked to your FNB ­account, so you can transfer funds between your bank accounts, but you cannot make a third party payment. There is no minimum balance and no monthly fees. The account is available in US dollars, euros, pounds, Australian dollars, Indian rupees and Chinese ­renminbi.

Standard Bank’s foreign currency account is available as a call account or notice account in US dollars, euros and pounds. The minimum balance is $400 (R6 265), €400 (R7 001) or £1 000 (R22 942). Third party payments are not allowed and ­deposits have to be done through Standard Bank’s nonresident centre.

The Nedbank foreign currency account has a ­48-hour notice period and no monthly maintenance fees. The foreign currency account is funded via your Nedbank current account and is available in US dollars, euros and pounds. The minimum deposit is $100, €100 or £100. Withdrawals will be paid to your Nedbank transactional account.

OFFSHORE FULL BANKING ACCOUNT

2. This is a bank account held offshore, usually in the Channel Islands. It is a regular bank account and you receive a debit card that you can use at any ATM or point of sale across the globe.

You have access to internet and mobile banking, and can make third party payments or even set up debit orders. These accounts have higher minimum ­deposit requirements, and monthly and transactional fees. ­Although, in many cases, debit card charges and monthly fees are waived if you maintain a minimum balance, other transaction fees such as international payments can carry hefty charges, so do your homework.

Typically, this would suit someone who is funding a child abroad, is a regular traveller or has significant assets offshore. These accounts can be opened via your local bank, although they are domiciled overseas.

Standard Bank has made offshore bank accounts available to a broader client base, offering customers accessible banking across the major currencies. FNB also offers a more accessible banking product, ­although it is limited to pounds, while Absa and ­Nedbank’s offshore bank accounts are only aimed at private wealth clients.

. The Standard Bank Optimum Account is registered on the Isle of Man and provides a Visa debit card, internet and cellphone banking, debit orders and third party payments. It is available in pounds, US dollars, euros and Australian dollars. The minimum balance is determined by the currency selected.

If you do not maintain a minimum balance, there is a quarterly fee on the account, which costs about R450 a month. There is no charge for debit card swipes at merchants, but there is a fee for ATM withdrawals.

. The Standard Bank Private Client Optimum ­Account is only available to Standard Bank private ­clients and has no monthly fee, no annual card fee and only requires a minimum balance of about R45­ 000 – although this is quoted in the currency of the bank ­account.

. The FNB Sterling Current Account through FNB Channel Islands offers a debit card and online banking. ATM and branch withdrawals are free, as are debit card swipes. A monthly fee of £15 is only charged if a ­minimum balance of £5 000 is not maintained.

For higher interest rates, one can also opt for a call account or a fixed deposit. The savings and investments accounts are available in pounds, US dollars and euros.

. Absa offers a Barclays bank account in the Isle of Man in your currency of choice. Online and cellphone banking is automatically issued, but Visa debit cards are only issued on British pound sterling current ­accounts. Clients only qualify for this proposition if they are in a position to open the account with £25 000 or a currency equivalent and are able to maintain this value with Barclays Wealth, although it could be placed in an investment via ­Barclays Wealth.

Accounts are opened free of charge and there is no monthly fee on the accounts unless the total holdings with Barclays falls below the minimum requirement, at which stage a £20 monthly fee will kick in.

. Nedbank Private Wealth offers their private wealth clients international banking across different ­global currencies, as well as Visa and American ­Express cards.