Experts condemn deduction of EMTL backlog on foreign currency transactions, says banks should be transparent

…..Urge customers to go to court

COMFORT EKELEME, Business Editor

Experts in the nation’s financial services industry have condemned the announcement by the Nigerian banks to commence the deduction of the backlog of Electronic Money Transfer Levy (EMTL) on old foreign currency transactions carried by customers on January 31, 2024.

According to the banks in messages sent to customers, the deductions will cover transactions between 2021 and 2023, adding that this is in line with the directive from the Federal Inland Revenue Service (FIRS).

In an interview with Daily Champion, Former President, of Chattered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu who condemned the move, urged bank customers to immediately go to court and stop any action being taken by anybody to commence such deductions.

Unegbu who also expressed surprise that banks could go ahead to do that and the Central Bank of Nigeria (CBN) could approve that, said this is surely not the way to make money.

“In fact, if I am any of those customers, the best to be done is to go to court and challenge it, am speaking as a lawyer now.

“From 2021, everything has gone and you are now bringing up things, you cannot. What they are doing is illegal, on what basis are they going to do that? Why didn’t they do that at the time the transactions were done.

“If they are looking for ways to make money, this is surely not the way to make money. For me, it is wrong and customers can challenge it in court so that the court can rule on it.

“There is no point keeping quiet, allowing illegality to take precedence over transactions that were done years back. Customers can go to court and challenge it,” he said.

Also speaking, a former President of, Association of National Accounts of Nigeria (ANAN), Dr. Samuel Nzekwe maintained that there is a need for Nigerian banks to be transparent.

He said, ” if the banks had deducted the commission at the point of transactions and didn’t remit, they have to find a way to pay. Customers should not be allowed to bear the brunt.

Nzekwe however, urged the banks rise up to their obligations to the CBN in order to move the economy forward in 2024.

Daily Champion recalled that the FIRS had directed Deposit Money Banks (DMBs) to deduct and remit the EMTL on Foreign Currency (FCY) transactions going forward.

FIRS said the levy is in line with the Finance Act 2020 and Stamp Act 2004, which impose an EMTL on the transfer of money deposited in any financial institution on any type of account.

Before the latest directive, the N50 charge on transactions from above N10,000 was only applicable to local currency transactions.

In a notice to the customers, the banks said,
“We write to inform you of the Federal Inland Revenue Service (FIRS) notice to all banks, in line with the Finance Act 2020 and Stamp Act 2004, to remit the Federal Government Electronic Money Transfer Levy from foreign currency (FCY) inflows.

“Previously, the Electronic Money Transfer Levy was solely applicable to accounts receiving electronic deposits of N10,000 and above or its equivalent. However, starting January 2, 2024, the deduction will be extended to FCY inflows equivalent of N10,000 and above, incurring a charge of N50 (FCY equivalent).

“In compliance with this notice, outstanding Electronic Money Transfer Levy on FCY inflows from January 2021 to December 2023 are also to be deducted by January 31, 2024. We appreciate your understanding and thank you for trusting,” the banks said.

Earlier in September last year, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu, while providing an update on remittances to the federation account, revealed that the sum of N83.02 billion accounted for revenues from the electronic money transfer levy out of which N3.32 billion was paid to FIRS as cost of collection between January and June 2023.

In August, the Central Bank of Nigeria (CBN) unveiled draft operational rules and regulations for in-country clearing and settlement of foreign currency (FCY) fund transfers among Nigerian banks.

The move seeks to enable faster, cheaper, and more transparent FCY transfers to create an efficient and safe operation of FCY transfers amongst Nigerian banks and improve the efficiency of the in-country FCY transfers, leading to greater confidence in the payment system.

The central bank said the settlement of clearing balances shall be accorded the highest priority for settlement under the new regime.