Overseas Currency Rules Clarified

Press, Volume CVII, Issue 31462, 31 August 1967, Page 22

Overseas Currency Rules Clarified

(New Zealand Press Association) WELLINGTON, August 30. It was not now legal for a New Zealand resident to acquire overseas currency from another New Zealand resident or from an overseas resident, the Reserve Bank said today. It was, therefore, illegal to export overseas currency arising from such a transaction.

The Reserve Bank released the text of its recent letter to the Bankers’ Association, the Stock Exchange Association, the Law Society and the Society of Accountants.

In a statement the bank said it was releasing the letter to clarify the situation concerning the • export of cheques and dividend warrants expressed in the currency of an overseas sterling area country. The chief cashier of the Reserve Bank (Mr D. L. Wilks), said that there had been recent prosecutions for breaches and it was clear that people were anxious to know where they stood regarding the Exchange Control Regulations. Mr Wilks said that the rulings given in his letter were based on legal advice. Inquiries at the bank suggested that there were three points which should be particularly emphasised. Mr Wilks said. “First, the recent prosecutions have involved only

transactions in which nonsterling currencies or dealings with non-residents have been involved.

“Second, the definition of the sterling area in the Exchange Control Regulations does not include New Zealand. Therefore, cheques or any other monetary instruments expressed in New Zealand currency are excluded from the rulings given in the letter. These may not be taken or sent from New Zealand without Reserve Bank approval. “Third, it is not now legal for a New Zealand resident to acquire overseas currency from either another New Zealand resident or an overseas resident. It is, therefore, illegal, either as a principal or an agent, to export overseas currency arising from such an illegal transaction.” Text Of Letter The text of the Reserve Bank’s letter to the Bankers’ Association and others was: Broadly speaking, we take the view that any instrument required to implement a legal transaction by a New Zealand resident overseas may be exported by the New Zealand resident or his agent If there is any doubt as to the legality of the transaction reference should be made to the Reserve Bank. Our ruling on the more common cases which arise are set out below. Dividend cheques or warrants expressed in a sterling area currency arising from overseas sterling investments may be exported for the credit overseas of the payee without formality. They may not be exported for the credit of any other New Zealand resident without prior Reserve Bank approval. Cheques drawn on their own overseas sterling area bank accounts by New Zealand residents for payments to overseas residents of the sterling area may be exported by a member of the New Zealand Stock Exchange to complete a purchase of sterling securities overseas without the approval of the Reserve Bank.

Cheques drawn by a member of the New Zealand Stock Exchange in an overseas sterling area currency for payment to a New Zealand client of the proceeds of a legitimate sale overseas of the client’s own sterling area securities may be exported for the credit of the payee. This does not include the proceeds of any sale of deposited securities. Payment For Security Cheques drawn by a New Zealand resident in an overseas sterling currency payable to a New Zealand sharebroker in payment for securities purchased overseas on the drawer’s behalf may be exported by the sharebroker for his own credit. Other overseas sterling area currency instruments, such as travellers’ cheques or bank notes, should not be exported without Reserve Bank approval. These will generally derive from either unused travel funds which must be resold to the New Zealand banking system or from illegal currency transactions with a New Zealand or an overseas resident.

Non-sterling area dividend warrants, cheques, currency of any type or securities may not be exported or otherwise dealt with without Reserve Bank approval, except that they may be exported for collection by a New Zealand trading bank when they have been paid into a New Zealand bank account.

Where a cheque or a draft drawn on an overseas bank by an overseas resident is received to pay for an investment in New Zealand this must be negotiated through a New Zealand bank and the fact recorded. Unless this is done, it will not normally be possible to obtain approval to remit the proceeds at a later date if the overseas resident wishes to realise his investment.

Scrip of companies registered in an overseas sterling area country may be exported without formality, but scrip in relation to shares on the overseas register of a New Zealand company may be exported only if Reserve Bank approval is held.