CFC Accounts or “Customer Foreign Currency” accounts are selected currency denominated accounts used by exporters and importers to hold foreign currency for payment of Goods or receipt of funds for products supplied or services rendered. CFC accounts are not intended for long term holding of funds and although the SA reserve bank has relaxed the settlement period of these accounts (the time in which you have to convert any foreign currency to ZAR) some businesses are keeping their funds in these accounts while keeping an eye on the exchange rate.

This is a very risky exercise where the holding costs of the currency are greater than the interest earned. Holding interest can be as high as 10 or 11% with interest earned as low as 2% which leaves a large gap that needs to be filled in the traded price differential that will need to made up before any profits on the forex held in the CFC account can be made.

Companies that make use of a CFC account and transact regularly are able to get exemption from the SA Reserve bank for the submission of BoP (Balance of Payments) forms for each transaction. Exemption from providing a BoP form needs to be applied for through an authorised financial Institution or licensed forex broker.

Overdrawn CFC accounts can be used to attract very low interest rates on overdrafts but the security must be available in a local account and will be determined by your local bank.

It is recommended that importers and exporters who transact regularly in foreign currency talk to their banks about the facilities available and the requirements for operating a CFC account. If you use a Forex broker, contact them to discuss the merits of holding a CFC account.