"Buying" foreign currency

[netorius77]

I have an opportunity to exchange some of my foreign funds (ZAR) with a friend in Australia. There are some significant benefits for us both in doing a private transaction (~AUD500k) and not using a forex service:
a) we negotiate the exchange rate,
b) we do not have to pay the exchange commissions,
c) we do not have to pay the bank fees for foreign transaction fees.

The monies are perfectly legal in each country and are after tax monies which can be fully justified, so nothing is illegal.

My question is if this would be acceptable from an ATO aspect and something to consider?

The saying that if something sounds to good/easy to be true, it probably is comes to mind, hence the question.

 

[Terry_w]

Any movement across borders?

You had better seek legal advice, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 may apply.

 

[netorius77]

Any movement across borders?

Thanks for that. We are not moving any cash physically. We were hoping that he would transfer a sum of ZAR to me in South Africa, and I would transfer the equivalent sum of AUD into his account in Australia.

You had better seek legal advice, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 may apply.

Once you start getting "legal advice" one might as well just use the conventional route as all savings will be negated by the costs of providing the advice.

 

[Terry_w]

Thanks for that. We are not moving any cash physically. We were hoping that he would transfer a sum of ZAR to me in South Africa, and I would transfer the equivalent sum of AUD into his account in Australia.
:

That is a movement across borders. Have a look at the Austrac website for starters.

You wouldn't want to enter into an illegal money remittance, or breach any of the reporting requirements.

 

[sanj]

you are talking about 500k here, you dont think spending maybe $500 is worthwhile to ensure you arent breaking any laws?

 

[netorius77]

Have a look at the Austrac website for starters.

Thanks - that is what I was looking for, but didn't quite know where to start.

 

[HotRod]

This wouldn't happen to be for lawyer's fees and legals to release USD2M from a foreign account now would it?

 

[netorius77]

you are talking about 500k here, you dont think spending maybe $500 is worthwhile to ensure you arent breaking any laws?

Thanks. I wasn't convinced that it would be complicated/risky, and if it is I won't do it... Just seemed like a good opportunity to save a bit of money from the bank's grasp.

 

[sanj]

Thanks. I wasn't convinced that it would be complicated/risky, and if it is I won't do it... Just seemed like a good opportunity to save a bit of money from the bank's grasp.

THe only way to work out if it is risky or not and the level of risk would be to get legal advice otherwise you arent making an informed decision. either way make sure you dont end up paying retail forex rates which are a rort in this country

 

[Terry_w]

What about the logistics of it. Who is going to transfer first?

Are you going to sit down with computers offside each other - like Mr Chow in Hangover II? What if you push send and he doesn't?

Will you have written agreements? What if the police freeze the money?

 

[netorius77]

either way make sure you dont end up paying retail forex rates which are a rort in this country

Agree with you 100% and exactly the reason I started the thread!

 

[netorius77]

What about the logistics of it. Who is going to transfer first?
Are you going to sit down with computers offside each other - like Mr Chow in Hangover II? What if you push send and he doesn't?
Will you have written agreements? What if the police freeze the money?

Agreed that could be a risk if I didn't know the person very well. Those are risks I have to manage, and are not even a vague concern to me at this time. I am trying to work out if it is legally possible at this stage.

 

[HotRod]

Agree with you 100% and exactly the reason I started the thread!

Interesting, when you change money in countries like Singapore/HK you get pretty close to the exchange rate. From memory last time I was in Singapore the rate was about S$1.28 to AU$1.00. I got S$1.26 from memory and no other fees.

ATM you'd be lucky to get S$1.21 (current rate is about S$1.27) plus maybe a $10 fee on top of that.

 

[coastymike]

Why not use something like www.hifx.com.au always found the rates to be quite good.

 

[marks]

You could look at a bank's escrow service for security in each country. Then it should also be a registered transaction for tax & anti-money laundering purposes.

Would it outweigh costs for the transfer?