16 Bank Transactions Exempted From CBN’s New Cyber Security Charges

In a significant move, the Central Bank of Nigeria (CBN) has issued a directive for all banks to implement a 0.5% cybersecurity levy on all electronic transactions to bolster cyber defences. However, in a bid to mitigate the impact on essential services and operations, the CBN has also outlined specific exemptions to this levy.

The directive, revealed in a circular signed by Chibuzo Efobi, Director of the Payments System Management Department, and Haruna Mustafa, Director of Financial Policy and Regulation Department, CBN, specifies that the new levy will be deducted at the source of electronic transfers. This amount will be visible in customer accounts under the ‘Cybersecurity Levy’ narration.

This new levy, set to commence two weeks from Monday, May 6, 2024, applies to all commercial, merchant, non-interest, and payment service banks, among others. Yet, it carefully excludes certain critical transactions to avoid undue burden on the consumer and essential banking activities.

Here’s a breakdown of the 16 exempted transactions:

1. Loan Disbursements and Repayments – Facilitating smoother financial assistance and debt servicing without additional costs.

2. Salary Payments – Ensuring that employees receive their earnings in full, without deductions for cybersecurity.

3. Intra-account Transfers – Both within the same bank and across banks for the same customer are not subject to the levy.

4. Intra-bank Customer Transfers – Movements between customers of the same bank remain unaffected.

5. Instructions from Other Financial Institutions – Related to correspondent banking activities.

6. Interbank Placements – Critical for maintaining liquidity among banks.

7. Transfers between Banks and CBN – Essential for regulatory and operational activities.

8. Inter-branch Transfers within a Bank – Essential for internal bank operations.

9. Cheque Clearing and Settlements – Central to banking operations, exempt from the levy.

10. Letters of Credit – Crucial for international trade financing.

11. Banks’ Recapitalisation-related Funding – Specific to bulk fund movements from collection accounts.

12. Deposits and Savings Transactions – Includes investments like Treasury Bills, Bonds, and Commercial Papers.

13. Government Social Welfare Programmes – Including pension payments to support societal welfare.

14. Non-profit and Charitable Transactions – Encouraging donations by exempting them from the levy.

15. Educational Institutions’ Transactions – Including tuition and other school-related payments.

16. Transactions Involving Bank’s Internal Accounts – Covers a range of internal bank financial movements.