Amidst the several complaints of the high cost of banking transactions in the country, Nigerians were treated to new levy that would be placed on their banking transactions last week Monday when the Central Bank of Nigeria released a circular directing that all financial institutions begin to deduct 0.5 per cent of certain transactions from customers account.
The deduction tagged cybersecurity levy becomes effective May 12, 2024, more than six years after it first proposed and is to be remitted to the National Security Fund which is being administered by the Office of the National Security Adviser.
No financial institution is spared as commercial banks, merchant banks, non-interest banks, payment system banks, Other Financial Institutions (OFIs) mobile money operators and payment service providers, who to comply and remit within the stipulated timeframe will face a penalty of two per cent of their annual turnover.
The circular dated May 6, 2024 and jointly signed by the CBN director of payments systems management, Chibuzor Efobi and Director, Financial Policy and Regulation, Haruna Mustafa, the CBN stated that 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 per cent (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 (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).
“Accordingly, all Banks, Other Financial Institutions and Payments Service Providers are hereby required to implement the above provision of the Act as follows: The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution.
“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.”
According to the directive, the fee will be applied during the initiation of electronic transfers, then deducted and sent by the financial institution. Customers will see the deducted amount labeled as ‘Cybersecurity Levy’ in their account statements.
This instruction, along with the list of exemptions, was outlined in a circular signed by Chibuzo Efobi, the Director of Payments System Management Department, and Haruna Mustafa, the Director of Financial Policy and Regulation Department.
It also listed out transactions that are exempted from the cybersecurity, these include Loan disbursements and repayments, 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.
Also excluded are Other Financial Institutions instructions to their correspondent banks, interbank placements, banks’ transfers to CBN and vice-versa, inter-branch transfers within a bank, cheque clearing and settlements as well as Letters of Credits.
Banks’ recapitalisation-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 are also exempted from the levy.
The levy will also not be deducted for government social welfare programmes transactions e.g. 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 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 CBN directed banks that “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.
“Within eight weeks of this circular – all Other Financial Institutions (Microfinance banks, Primary Mortgage banks, Development Finance Institutions). Exemptions – To avoid multiple application of the levy on the same transaction/transfer, Appendix 1 (attached) captures transactions currently deemed eligible and are exempted from the application of the levy.”
“Section 44 (8) of the Act prescribes that failure to remit the levy is an offence and is liable on conviction to a fine of not less than two per cent of the annual turnover of the defaulting business, amongst others.”
