South Africa’s Offshore Money Scandal: What Happened?
A fintech firm called Kastelo, which has ties to Democratic Alliance (DA) MP Mark Burke, is under investigation for allegedly moving about R4 billion out of South Africa using ordinary people’s foreign‑exchange allowances. The South African Reserve Bank (SARB) says the company broke exchange‑control rules, while Kastelo insists its actions were legal. The case has stirred politics, with the DA pulling Burke from finance committees and opposition parties calling for criminal charges.
How the Money Was Supposedly Moved Abroad
South Africans are allowed to send a limited amount of money overseas each year:
- Single Discretionary Allowance (SDA) – up to R1 million per person.
- Foreign Investment Allowance (FIA) – up to R10 million per person.
According to SARB’s court documents, Kastelo had 891 clients, giving it access to roughly R891 million in SDA and R8.9 billion in FIA each year. The bank alleges that Kastelo used these allowances to buy foreign currency and send it offshore, even though the clients did not know their allowances were being used that way.
Some clients reportedly received small bonuses – R2 000 for using their SDA and R10 000 for using their FIA – as an incentive to let Kastelo handle their money. The Reserve Bank also noted that certain clients, earning around R15 000 a month, were given loans of nearly R250 000 to fund the transactions, raising questions about whether they truly understood what was happening.
Kastelo’s Side of the Story
Kastelo rejects the Reserve Bank’s claims. The company says its clients gave it discretionary mandates to invest their money. Kastelo says it used an automated trading strategy that looked for price differences in cryptocurrency markets. The process involved:
- Converting rands to foreign currency.
- Sending the money overseas for trading.
- Bringing the profits back to South Africa in rands after each trade cycle.
Because the funds returned to the country, Kastelo argues that no money was permanently exported and that its model stayed within the rules governing foreign exchange.
Political Reactions
The allegations put the DA in a tough spot. Initially the party backed Burke, but after the Reserve Bank’s blocking order stood up in court, the DA removed him from all finance‑related parliamentary committees.
The ANC criticised the move, saying stepping aside from committees does not erase responsibility. It announced plans to lay criminal charges against both Burke and Kastelo, arguing that political office should not protect anyone from the law.
The Economic Freedom Fighters (EFF) echoed the call for a thorough investigation, describing the alleged behaviour as financial crime – using other people’s money and identities without their full knowledge, hiding offshore accounts, and misleading the central bank.
Burke himself said he resigned from Kastelo in 2024 to focus on his political career and stopped serving as chairperson of the Kastelo Group in February 2026.
What This Means for South Africa
The case highlights how exchange‑control mechanisms can be exploited when companies pool individual allowances. It also shows the importance of transparency: clients need to know exactly how their money is being used, and regulators must monitor complex financial models that involve cryptocurrencies and offshore transfers.
If the Reserve Bank’s allegations are proven, it could lead to stricter rules on how fintech firms handle foreign‑exchange allowances and stronger penalties for misuse. For ordinary South Africans, the scandal serves as a reminder to read the fine print when giving anyone permission to manage their money abroad.
Conclusion
The Kastelo controversy is still unfolding. While the firm maintains its innocence, the Reserve Bank’s evidence suggests that billions of rands may have been moved offshore through a network of individual allowances, possibly without the account holders’ full awareness. Political parties are trading accusations, and the outcome could reshape how South Africa regulates foreign exchange and oversees fintech innovations. Whatever the final verdict, the episode underscores the need for clear communication, strong oversight, and accountability in the country’s financial system.
