The Central Bank of Nigeria (CBN) has initiated the implementation of a 0.5 percent levy on all electronic transactions as part of its efforts to combat the growing threats of cybercrime in the financial system. This decision follows the enactment of the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024, which mandated the deduction rate as stipulated in Section 44 (2)(a) of the Act.
In a circular dated May 6, 2024, jointly signed by Chibuzo Efobi, Director of Payments System Management Department, and Haruna Mustafa, Director of Financial Policy and Regulation Department, the CBN directed all commercial, merchant, non-interest, and payment service banks, as well as other financial institutions, Mobile Money Operators, and Payment Service Providers to comply with the new provision of the Act.
According to the circular, the deducted funds are to be remitted to the National Cybersecurity Fund (NCF), administered by the Office of the National Security Adviser (ONSA). The levy will be applied at the point of electronic transfer origination and subsequently deducted by the financial institution, with the amount reflected in the customer’s account under the narration “Cybersecurity Levy.”
The CBN clarified that the levy exemptions include certain transactions such as loan disbursements and repayments, salary payments, intra-account transfers within the same bank, among others. Additionally, institutions failing to remit the levy are subject to penalties outlined in Section 44 (8) of the Act, including fines of not less than two percent of the annual turnover of the defaulting business upon conviction.
The circular also outlined timelines for system reconfigurations to ensure timely remittance of levies collected, with commercial banks required to complete the process within four weeks and other financial institutions within eight weeks from the date of the circular.
Furthermore, transactions involving various banking activities such as cheques clearing, interbank placements, and government social welfare programs are exempted from the levy.
The CBN emphasized the importance of compliance with the provisions of the Act and the circular, urging all institutions under its regulatory purview to adhere to the directive.
