What To Know About CBN’s New Directive To Banks On 0.5% Cybersecurity Levy

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The Central Bank of Nigeria (CBN) declared yesterday that, as of May 20, 2024, all electronic transactions would be subject to a 0.5 percent cybersecurity levy. The news caused a stir, with many people pointing out that the elimination of gasoline subsidies has made life in the nation difficult and increased the cost of products and services.

The notification, which was included in a circular jointly signed by the CBN’s Director of Payments Systems Management Chibuzor Efobi and Director of Financial Policy and Regulation Haruna Mustafa, instructed all financial institutions to start the deductions for onward remittance.

What to know

  • Yesterday’s announcement is an enactment of the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024. Pursuant to the provisions of Section 44 (2)(a) of the Act, financial institutions are required to remit a levy of 0.5% (0.005) equivalent to half a percent of all electronic transactions’ value to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).
  • The 5 percent cybersecurity levy deductions are to be remitted to the National Security Fund, overseen by the Office of the National Security Adviser (ONSA).
  • The levy is for electronic transactions conducted through various financial channels, including commercial banks, merchant banks, non-interest banks, payment system banks, Other Financial Institutions (OFIs), mobile money operators, and payment service providers.
  • Failure to comply with the directive and remit the levy within the specified timeframe will result in a penalty of two percent of the institution’s annual turnover.
  • The CBN initially released guidelines for the collection of a 0.005 percent levy on electronic transactions for the National Cybersecurity Fund on June 25, 2018. However, the implementation of this levy did not take off as planned.
  • Failure to comply with the directive and remit the levy within the specified timeframe will result in a penalty of two percent of the institution’s annual turnover.
  • The deducted amount shall be reflected in the customer’s account with the narration: “Cybersecurity Levy”. Deductions shall commence within two (2) weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF account domiciled at the CBN by the 5th business day of every subsequent month.
  • System reconfigurations towards ensuring complete and timely submission of remittance files to the Nigeria Interbank Settlement System (NIBSS) Plc shall be completed within four weeks of this circular – Commercial, Merchant, Non- Interest and Payment Service Banks; and Mobile Money Operators.

Amount and percentage levy:

  • ₦5 on ₦1,000
  • ₦50 on ₦10,000
  • ₦500 on ₦100,000
  • ₦5,000 on ₦1,000,000
  • ₦50,000 on ₦10,000,000

List of exemptions from cybersecurity charges:

  • Salary payments
  • Intra-account transfers within the same bank or between different banks for the same customer
  • Intra-bank transfers between customers of the same bank
  • Other Financial Institutions (OFIs) instructions to their correspondent
  • banks Interbank placements
  • Banks’ transfers to CBN and vice-versa
  • Inter-branch transfers within a bank
  • Cheques clearing and settlements
  • Letters of Credits (LCs)
  • Banks’ recapitalization-related funding – only bulk funds movement from collection accounts
  • Savings and deposits including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers.
  • Government Social Welfare Programs transactions e.g. Pension payments
  • Non-profit and charitable transactions including donations to registered nonprofit organisations or charities.
  • Educational Institutions transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions.
  • Transactions involving the 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

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