President Tinubu Directs CBN To Halt Cybersecurity Levy

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President Bola Tinubu has asked the Central Bank of Nigeria (CBN), to suspend the implementation of the cybersecurity levy policy and directed a comprehensive review.

It was gathered that the decision followed last Thursday’s resolution of the House of Representatives, which directed the CBN to withdraw its circular directing 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 directing all banks, mobile money operators, and payment service providers to implement a new cybersecurity levy citing the provisions of the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.

According to the Act, a levy amounting to 0.5 per cent of the value of all electronic transactions will be collected and remitted to the National Cybersecurity Fund to be overseen by the Office of the National Security Adviser.

Following the CBN’s directive, financial institutions were required to apply the levy at the point of electronic transfer origination, adding that the deducted amount was to be explicitly noted in customer accounts under the descriptor “Cybersecurity Levy” and remitted by the financial institution.

Accordingly, all financial institutions were required to start implementing the levy within two weeks from the date of the issuance of the circular just as the deduction of the levy by financial institutions was to commence on May 20, 2024.

However, financial institutions were to make remittances in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.

The circular also stipulated a timeframe for financial institutions to reconfigure their systems to ensure complete and timely submission of remittance files to the Nigeria Interbank Settlement Systems Plc as follows: “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 emphasised strict adherence to the mandate and warned that any financial institution that fails to comply with the provisions will face severe penalties.

As outlined in the Act, non-compliant entities are subject to a minimum fine of two per cent of their annual turnover upon conviction.

The circular however provided a list of transactions currently deemed eligible for exemption, to avoid multiple applications of the levy which included 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.

The exemptions include other financial institutions’ transfers to their correspondent banks, interbank placements, banks’ transfers to CBN and vice versa, inter-branch transfers within a bank, cheque clearing and settlements, letters of credit, and banks’ recapitalisation-related funding.

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.

The exemptions were expected to also include pension payments, non-profit and charitable transactions, donations to registered non-profit organisations or charities, educational institutions transactions, 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.

However, the introduction of the cybersecurity levy sparked reactions among stakeholders who criticised it, stressing that it would raise the cost of doing business in Nigeria as well as hinder the growth of digital transaction adoption.

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