The Central Bank of Nigeria (CBN) has mandated that all financial institutions initiate the deduction of a cybersecurity fee on electronic transactions starting from May 20, 2024.
This was disclosed in a circular sent to various types of banks, mobile money operators, payment service providers, and other entities. The circular was signed by Chibuzor Efobi, the Director of Payment System Management, and Haruna.B. Mustafa, the Director of Financial Policy and Regulation, representing the apex bank.
According to in the statement, the implementation of the cybersecurity levy follows the enactment of the 2024 Cybercrime (Prohibition, Prevention, etc.) Amendment Act. This legislation mandates a deduction of 0.5% from the value of all electronic transactions. These funds are designated for the National Cyber Security Fund, overseen by the Office of the National Security Adviser (NSA).
The circular noted that the deduction would be described as Cyber security levy, and the relevant financial institutions should begin deduction in two weeks following the circular.
It stated,
“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% (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:”
“Calculate the levy based on the total 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 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 fifth business day of every subsequent month.”
Exceptions to the levy 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, inter-branch transfers within a bank, cheque clearing and settlements, Letters of Credits, banks’ recapitalization-related funding, only bulk funds movement from collection accounts, savings and deposits including transactions involving long-term investments, among other specified categories.
The Central Bank of Nigeria (CBN) has been actively engaged in efforts to reform the financial sector, as evidenced by recent directives. One such directive prohibits fintech companies from acquiring new customers. Consequently, fintechs have cautioned their clients against participating in cryptocurrency transactions on their platforms. Additionally, this development closely follows a recent directive from the Federal Government instructing Deposit Money Banks to immediately implement a 0.375% stamp duty charge on all mortgage-backed loans and bonds.