Nigeria to charge levy on domestic transfers to fund cybersecurity, exempts 16 transactions

Central Bank of Nigeria (CBN) has ordered all banks to start charging a 0.5 per cent cybersecurity levy on all electronic transactions within the country but excluded 16 listed banking deals. The transactions excluded from the cybersecurity charge are 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; Other Financial Institutions instructions to their correspondent banks; Interbank placements; Banks’ transfers to CBN and vice-versa. 

Other exceptions are Inter-branch transfers within a bank; Cheque clearing and settlements; 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; 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.

According to a circular signed by the Director, Payments System Management Department, Chibuzo Efobi; and the Director, Financial Policy and Regulation Department, Haruna Mustafa; the cybersecurity levy would commence two weeks from May 6, 2024. The apex bank in the circular directed to all commercial, merchant, non-interest, and payment service banks, among others; to start the implementation of the cybersecurity charges after two weeks of the information. “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”.

The CBN said the funds will be managed by security adviser’s office and that non-compliance will attract a charge of 2% of the institution’s annual turnover. The new levy follows a clampdown on cryptocurrency, which officials have blamed for Nigeria’s currency weakness. The Naira has hit record lows due to dollar shortages as crypto transactions in the country have flourished. In March, Nigeria charged Binance, the world’s largest crypto exchange and two of its executives, facing separate trials on tax evasion and money laundering, which the company is challenging. Binance head of financial crime compliance, Tigran Gambaryan, a U.S. citizen, is being held in detention in Nigeria. Last month, commercial banks introduced a 2% processing fee for cash deposits from 500,000 Naira and above for individuals and a 3% processing fee for corporate transactions from three million Naira and above.