President Bola Tinubu has asked the Central Bank of Nigeria (CBN) to suspend the implementation of the cybersecurity levy policy and ordered a review, The Punch reports.
This followed the decision of the House of Representatives, last Thursday, which asked the CBN to withdraw its circular directing all banks to commence charging a 0.5 per cent cybersecurity levy on all electronic transactions in the country.
The CBN on May 6, 2024, issued a circular mandating all banks, mobile money operators, and payment service providers to implement a new cybersecurity levy, following the provisions laid out in the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.
According to the Act, a levy of 0.5 per cent of the value of all electronic transactions will be collected and remitted to the National Cybersecurity Fund, overseen by the Office of the National Security Adviser.
Financial institutions are required to apply the levy at the point of origination of electronic transfer.
The deducted amount is to be explicitly noted in customer accounts under the descriptor “Cybersecurity Levy” and remitted by the financial institution. All financial institutions are required to start implementing the levy within two weeks from the issuance of the circular.
By implication, financial institutions’ deduction of the levy should commence on May 20, 2024.
However, financial institutions are to make their remittances in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.
The circular also stipulates a timeframe for financial institutions to reconfigure their systems to ensure the complete and timely submission of remittance files to the Nigeria Interbank Settlement Systems Plc: “Commercial, Merchant, Non-Interest, and Payment Service Banks—Within four weeks of the issuance of the Circular.
“All other Financial Institutions (Microfinance Banks, Primary Mortgage Banks, Development Financial Institutions) – Within eight weeks of the issuance of the Circular,” the circular noted.
The CBN has emphasised strict adherence to this mandate, warning that any financial institution that fails to comply with the provisions will face severe penalties. As the Act outlines, non-compliant entities are subject to a minimum fine of two per cent of their annual turnover upon conviction.
The circular provides a list of transactions currently deemed eligible for exemption, to avoid multiple applications of the levy.
These are loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, and intra-bank transfers between customers of the same bank.
Exemptions include transfers from other financial institutions to their correspondent banks, interbank placements, transfers from banks to the CBN and vice versa, inter-branch transfers within a bank, cheque clearing and settlements, letters of credit, and recapitalisation-related funding from banks.
Others are bulk funds movement from collection accounts, savings, and deposits including transactions involving long-term investments such as treasury bills, bonds, and commercial papers, and government social welfare programmes transactions.
These may include pension payments, non-profit and charitable transactions including donations to registered non-profit organisations or charities; educational institutions transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions, and transactions involving the bank’s internal accounts; inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
The introduction of the new levy sparked varied reactions among stakeholders. It is expected to raise the cost of conducting business in Nigeria and could potentially hinder the growth of digital transaction adoption.
