5 Things To Know About CBN’s New Cybersecurity Levy Imposed On Nigerians

In a circular issued on Monday, May 7, the CBN disclosed that the implementation of the levy would start two weeks from today.

The circular was directed to all commercial, merchant, non-interest, and payment service banks, among others.

The levy, set at 0.5% (0.005) of the value of all electronic transactions, is a requirement of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024.

This levy is to be remitted to the National Cybersecurity Fund, managed by the Office of the National Security Adviser.

All commercial, merchant, non-interest, and payment service banks, among others, are instructed to implement this directive.

The CBN clarified that the levy should be deducted at the point of origin of electronic transfers remitted by financial institutions. The deducted amount will be reflected in the customer’s account with the description “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.”

The circular outlined exemptions from the levy, including loan disbursements and repayments, salary payments, and intra-account transfers within the same bank or between different banks for the same customer, among others.

Five key points to know about the cybersecurity levy:

1. Mandated Levy Percentage

According to the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024, a levy of 0.5%, equivalent to half a percent, is to be applied to electronic transactions. This levy aims to bolster efforts to combat cyber threats and safeguard digital transactions within the Nigerian financial ecosystem.

2. Levy Implementation Process

The levy is to be borne by the originator of the electronic transaction and subsequently deducted by the financial institution facilitating the transaction. Following deduction, the amount shall be reflected in the customer’s account with a specific narration denoting it as the “Cybersecurity Levy.” This transparent approach ensures accountability and traceability of levy transactions.

3. Utilization of Levy Funds

Proceeds from the cybersecurity levy are earmarked for the National Cybersecurity Fund, under the administration of the Office of the National Security Adviser. These funds are instrumental in bolstering cybersecurity infrastructure, initiatives, and capacity-building efforts aimed at fortifying Nigeria’s resilience against cyber threats.

4. Operational Timeline and Compliance Requirements

Financial institutions are mandated to commence levy deductions within two weeks from the date of the circular issued by the CBN, effective May 6. Furthermore, these institutions are required to remit collected levies in bulk to the designated National Cybersecurity Fund account domiciled at the CBN. Monthly remittances must occur by the fifth business day of the subsequent month. Compliance with these timelines ensures seamless levy administration and fund utilization.

5. Exempted Transactions

While the levy applies to a broad spectrum of electronic transactions, certain categories are exempt. These include loan disbursements and repayments, salary payments, and intra-account transfers within the same bank or between different banks for the same customer, among others. Understanding these exemptions is essential for clarity and compliance purposes, ensuring smooth transaction processes for exempt categories.

In conclusion, the implementation of the cybersecurity levy signifies a proactive step by regulatory authorities in enhancing cybersecurity resilience within Nigeria’s financial landscape.

By comprehending the levy’s scope, operational modalities, and compliance requirements, stakeholders can navigate this regulatory framework effectively.

Additionally, continued collaboration between regulatory bodies, financial institutions, and other stakeholders is paramount in fostering a secure and resilient digital ecosystem for Nigeria’s economic advancement.