Letters of credit (L/Cs) have been exempted from an order from the Central Bank of Nigeria (CBN) to banks in the country to begin imposing a cybersecurity levy on many types of transactions.

The CBN says all banks, other financial institutions, and payment service providers are now required to follow the order.

Cybercrime legislation

The circular responds to amendments made his year to Nigeria's cybercrime legislation which calls for a levy of 0.5 per cent levy on all electronic transactions specified in the amended law.

The CBN says the levy must be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution.

L/Cs and other exemptions

As well as L/Cs, exempt transactions include inter-branch transfers within a bank, check clearing and settlements, bulk fund movements from collection accounts, savings and deposits.

Loan disbursements, repayments, salary payments, intra-account transfers within or between banks for the same client, and intra-bank transfers between customers of the same bank are also excluded from the levy.

System reconfigurations

Commercial banks, mobile money operators, non-interest and payment service banks, and merchant banks must finalise system reconfigurations for paying the levy within four weeks of the circular issued on 6 May to facilitate remittance.

Microfinance banks, primary mortgage banks, and development finance institutions have an eight-week window to complete the necessary system reconfiguration.

The CBN's Circular to all commercial, merchant, non-interest, and payment service banks, among others can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.