Draft Capital Flow Management Regulations open for comment
National Treasury has published draft Capital Flow Management Regulations 2026 for public comment. These new regulations will replace the existing Exchange Control Regulations of 1961, with comments due by June 10, 2026.
Modernizing cross-border capital flows
The draft regulations signal South Africa's shift to a 'positive bias' approach for managing cross-border capital flows.
This modernised framework emphasizes fewer transaction pre-approvals, a stronger focus on reporting, and enhanced surveillance of high-impact and high-risk cross-border transactions, alongside combating illicit financial flows.
The aim is to align South Africa with international best practice and manage risks using a risk-based approach and macroprudential tools.
Key features address gaps in current rules, notably for cross-border crypto asset transactions, complementing existing financial sector regulation.
They also introduce new definitions, transitional arrangements, administrative sanctions on regulated entities, and increased penalties.
Provisions clarify foreign asset declarations and remove restrictions on non-resident securities, resolving uncertainties for local businesses controlled from abroad.
From prudence to positive bias
Since the abolition of the financial rand in 1991, South Africa has adopted a prudent approach to managing cross-border capital flows.
This involved gradually recalibrating exchange controls to reflect the macroeconomic policy stance.
In recent years, National Treasury and the South African Reserve Bank (SARB) have been reviewing the 1961 Exchange Control framework.
These reviews aimed to refine policies and support South Africa's growth and global integration.
The economy's susceptibility to volatile capital flows and exchange rate swings was also acknowledged.
Global integration is seen as a driver for foreign investment growth, technology exchange, human capital development, and mitigating investment risks through diversification.