From May 20th, banks in the country will start charging a 0.5 percent cybersecurity levy on electronic transfers, on the Central Bank of Nigeria’s direction. The circular was directed to all commercial, merchant, non-interest and payment service banks, among others.
According to the apex bank, the directive is a follow-up on an earlier letter dated June 25, 2018 (Ref: BPS/DIR/GEN/CIR/05/008) and October 5, 2018 (Ref: BSD/DIR/GEN/LAB/11/023), respectively, on compliance with the Cybercrimes (Prohibition, Prevention, Etc.) Act 2015.
The circular signed by the Director, Payments System Management Department, Chibuzo Efobi, and the Director, Financial Policy and Regulation Department, Haruna Mustafa read in part;
“Following the enactment of the Cybercrime (Prohibition, Prevention, etc.) (amendment) Act 2024 and pursuant to the provision of Section 44 (2)(a) of the Act, ‘a levy of 0.5% (0.005) equivalent to a half percent of all electronic transactions value by the business specified in the Second Schedule of the Act,’ is to be remitted to the National Cybersecurity Fund, which shall be administered by the Office of the National Security Adviser.”
Here are some things to know about the cybersecurity levy to be paid by Nigerians, according to the CBN circular:
1. A new levy of 0.5%, equivalent to half per cent, is applied to electronic transactions as mandated by the Cybercrime (Prohibition, Prevention, etc.) (amendment) Act 2024.
2. The levy is paid by the originator of the electronic transaction and deducted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration: “Cybersecurity Levy.”
3. Financial institutions will deduct the levy and remit it to the National Cybersecurity Fund administered by the Office of the National Security Adviser.
4. Deductions shall commence within two weeks from the date of the circular, May 6, and financial institutions must remit collected levies in bulk to the NCF account domiciled at the CBN monthly by the fifth business day of the following month.
5. Financial institutions have deadlines to update their systems to handle levy deduction and remittance. Failure to remit the levy can result in penalties, including a fine of up to 2% of a financial institution’s annual turnover.
The CBN has, however, issued exemptions from the cybersecurity levy following the enactment of the 2024 Cybercrime Amendment Act. These exemptions include;
1. Loan disbursements and repayments
2. Salary payments
3. Intra-account transfers within the same bank or between different banks for the same customer
4. Intra-bank transfers between customers of the same bank
5. Other Financial Institutions instructions to their correspondent banks
6. Interbank placements,
7. Banks’ transfers to CBN and vice-versa
8. Inter-branch transfers within a bank
9. Cheque clearing and settlements
10. Letters of Credits
11. Banks’ recapitalization-related funding — only bulk funds movement from collection accounts
12. Savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers.
13. Government Social Welfare Programs transactions e.g. Pension payments
14. Non-profit and charitable transactions, including donations to registered non-profit organizations or charities
15. Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions
16. Transactions involving bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
The deduction and collection of the cybersecurity levy is a sequel to the enactment of the 2024 Cybercrime (prohibition, prevention etc.) Amendment Act of 2024, the CBN revealed.
The next few weeks will reveal how Nigerians would react to this new levy, meanwhile, we will keep you abreast of any further development on this
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