CBN Directs Banks to Implement 0.5% Cybersecurity Levy on Transactions

 

      The Central Bank of Nigeria (CBN), had instructed all banks to enforce a 0.5% cybersecurity levy on all transactions. Essentially this means that for every 1million Naira transfer, an additional 5000 Naira would be charged by the bank and remitted to the National Security Adviser(NSA) office for Cybersecurity purposes.

         

     However they are 16 banking transactions that are exempted from the CBN’s new cybersecurity levy:

1.  Loan disbursements and repayment 
2.  Salary payments 
3.  Intra-account transfer 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 to their correspondent banks.
6.  Interbank placements. 
7.  Bank’s transfers to CBN and vice-versa
8.  Intra-branch transfers within a bank
9.  Cheque clearing and settlements 
10.  Letter of Credits (LCs
11.  Bank’s recapitalization- related funding- only bulk funds movement from collections accounts.
12.  Savings and deposits, including transactions involving long- term investments such as Treasury Bills, Bonds, and Commercial papers.
13.  Government Social Welfare Programmes 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 account, clearing accounts, profit and loss accounts, inter- branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts. 

     

     Here are some things to know about the cybersecurity levy to be paid by Nigerians, according to the CBN circular.

• 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.

• The cybersecurity levy is covered by the sender of the electronic transactions and subtracted by the financial institution, with the deducted sum noted in the customer’s account under the description: “Cybersecurity Levy.” 

• Financial institutions are tasked with deducting the levy and forwarding it to the National Cybersecurity Fund, which is managed by the Office of the National Security Adviser. 

• 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 months.

• 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% if a financial institution’s annual turnover. 

      According to the circular, the implementation of the levy would start in two weeks. The circular read in part “Following the enactment of the (Prohibition, Prevention, etc) (amendment) Act 2024 came into effect, in accordance with Section 44(2)(a) of the Act, a levy of 0.5%(0.005), equating to half a percent of the total of all electronic transactions by the business listed in the Second Schedule of the Act, is required to be sent to the National Cybersecurity Fund. This fund will be overseen by the Office of the National Security Adviser.