Members of the House of Representatives have demanded that the Central Bank of Nigeria (CBN) temporarily withdraw the circular instructing banks to start implementing the 0.5% cybersecurity levy, labeling it as “ambiguous.”
The response came following a motion of urgent importance to stop and revise the implementation of the cybersecurity levy. It was introduced before the House by Kingsley Chinda.
The House stated that the CBN should withdraw the original circular and “issue a more understandable one.”
Honourable Chinda had brought the House’s attention to multiple interpretations of the CBN directive, which contradict the specifications in the Cybersecurity Act.
The House expressed concern that the Act could be wrongly implemented if immediate steps are not taken to address the issues surrounding the interpretation of the CBN directive and the Cybersecurity Act.
Consequently, the House directed the CBN to withdraw the existing ambiguous circular and issue a clear one that aligns with the letter and spirit of the Cybercrimes (Amendment) Act, 2024.
The Green Chamber also mandated its Committee on Banking Regulations as well as Committee on Banking and Other Ancillary Institutions to guide the CBN effectively.
This followed the adoption of a motion of urgent public importance moved by the House Minority Leader, Hon. Kingsley Chinda (PDP Rivers), and 359 others.
Recommended reading: Explainer: Is CBN’s cybersecurity levy 0.5% or 0.005%?
What the lawmaker is saying
In presenting the motion, Chinda noted that the CBN, through a circular addressed to all commercial, merchant, non-interest, and payment service banks, other financial institutions, mobile money operators, and payment service providers (“CBN Circular”) dated May 6, 2024, informed Nigerians of a proposed 0.5% levy on electronic transactions in line with Section 44(2)(a) of the Cybercrimes (Amendment) Act, 2024.
He highlighted that Section 44(2)(a) of the Cybercrimes (Prohibition, Prevention, etc.) (Amendment) Act, 2024, mandates “a levy of 0.5% (0.005), equivalent to half a percent of all electronic transaction values by businesses specified in the Second Schedule to the Act,” to be paid into the Cybersecurity Fund.
“Further notes that businesses which the said Section 44(2)(a) refers to are listed in the Second Schedule to the Cybercrimes Act to be: a) GSM Service Providers and all telecommunication companies; b) Internet Service Providers; c) Banks and Other Financial Institutions; d) Insurance Companies and e) Nigerian Stock Exchange.
“Concerned that the CBN circular mandates all Banks, Other Financial Institutions and Payments Service Providers to implement the Cybercrimes Act by applying the levy at the point of electronic transfer origination as “Cybersecurity Levy” and remitting same.
“Further concerned that the wordings of the CBN Circular leaves the CBN directive to multiple interpretations including that the levy be paid by Bank customers, that is, Nigerians against the letters and spirit of Section 44(2)(a) and the Second Schedule to the Cybercrimes Act, which specifies the businesses that should be levied accordingly,” Chinda said.
Backstory
- The deduction and collection of the cybersecurity levy follow the enactment of the 2024 Cybercrime (Prohibition, Prevention, etc.) Amendment Act of 2024, which mandates a 0.5% deduction of the value of all electronic transactions for the National Cyber Security Fund, administered by the ONSA.
- The circular noted that the deduction would be labelled as the “Cybersecurity Levy,” and relevant financial institutions should begin deductions within two weeks of the circular.
- Moreover, the apex bank stated that the penalty for defaulting is as prescribed in the amended Cybercrime Prohibition and Prevention Act, which carries a fine amounting to no less than 2% of the turnover of the defaulting business, among other penalties.
- The new policy is expected to take effect in two weeks, according to a circular jointly signed by Chibuzor Efobi, CBN’s Director of Payment System Management, and Haruna Mustafa, Director of Financial Policy and Regulation.
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