President Bola Tinubu has directed a study and instructed the Central Bank of Nigeria to halt the cybersecurity levy policy’s implementation.
This came after the House of Representatives voted last Thursday to request that the CBN rescind the circular that mandated all banks start levying a 0.5% cybersecurity fee on all electronic transactions made in the nation. Following the guidelines outlined in the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024, the CBN issued a circular on May 6, 2024, requiring all banks, mobile money providers, and payment service providers to impose a new cybersecurity charge.
The National Cybersecurity Fund, which is supervised by the Office of the National Security Adviser, will receive a levy equal to 0.5 percent of the total value of all electronic transactions, as per the Act. The fee must be applied by financial institutions at the origination point of electronic transfers.
The sum that has been withheld must be clearly indicated in client accounts with the label “Cybersecurity Levy” and sent by the financial institution. The fee must be implemented by all financial institutions within two weeks of the circular’s release. It follows that financial institutions should start deducting the fee on May 20, 2024. Remittances from financial institutions, however, must be made in bulk to the NCF account held at the CBN by the fifth business day of the following month.
The circular also provides financial institutions with a timeline for system reconfiguration in order to guarantee the timely and accurate submission of remittance files to the Nigeria Interbank Settlement Systems Plc. The timeline is as follows: “Banks providing payment services, merchant accounts, non-interest banks, and commercial accounts—within four weeks of the circular’s release.
The circular said that “all other financial institutions (development financial institutions, primary mortgage banks, and microfinance banks) – within eight weeks of the issuance of the Circular.”
The CBN has emphasized the need for rigorous adherence to this obligation and has threatened to impose harsh penalties on any financial institution that disobeys the rules. According to the Act, upon conviction, non-compliant entities face a minimum penalties equal to two percent of their yearly sales. To prevent the charge from being applied more than once, the circular offers a list of transactions that are currently considered eligible for exemption. These include salary payments, loan disbursements and repayments, intra-account transfers for the same client within the same bank or between banks, and intra-bank transfers between the same bank’s customers.
Transfers by other financial institutions to their correspondent banks, placements between banks, transfers by banks to the CBN and vice versa, transfers between branches within a bank, clearing and settling checks, letters of credit, and funding for banks’ recapitalization are among the exclusions. The transfer of large amounts of money from savings, deposits, and collection accounts, as well as transactions involving long-term assets like bonds, treasury bills, and commercial papers, as well as transactions related to government social welfare programs, are among the others.
These could include pension payments, charitable and non-profit transactions, such as donations to officially recognized charities or non-profit organizations, and transactions involving schools, universities, and other educational institutions. They could also include transactions involving the bank’s internal accounts, reserve accounts, nostro and vostro accounts, and escrow accounts. Stakeholders’ reactions to the proposed fee were mixed because it is anticipated to increase the cost of doing business in Nigeria and would impede the spread of digital transaction usage.
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