CBN’s cashless policy to curb illicit financial flows, others – Analyst at PWC

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Story by Kayode Tokede

Analyst at PWC, Mr. Taiwo Oyedele has said the Central Bank of Nigeria (CBN) nationwide cashless policy by 2020 will help the nation’s economy to curb illicit financial flows and reduce the apex bank cost of cash management.

Oyedele who is the head of tax and corporate advisory services at PwC Nigeria, said the policy implementation would bring more transactions within the banking system for tracking and tax purposes.

The apex bank in a circular on Tuesday said, bank customers are to start paying for deposits and withdrawals starting from September 18, 2019.

The circular signed by Director, Payments system management Department, CBN , Sam Okojere on Tuesday noted that nationwide implementation of the cashless policy will begin by March 2020.

He noted that the charges would attract three per cent processing fees for withdrawals and two per cent processing fees for lodgments of amounts above N500,000 for individual accounts.

Oyedele in several tweets on Wednesday said, “On the positive side, this will help curb illicit financial flows, reduce CBN’s cost of cash management and bring more transactions within the banking system for tracking and tax purposes.”

According to his tweets, the new policy is based on the cashless policy of the CBN, stressing that the new charges are in addition to all the current bank charges already being paid.

He narrated that, “For example, as an individual or unincorporated business if you deposit N1million cash, your bank will deduct N20,000 (N30,000 for withdrawal).

@For a company account, you will pay N150,000 to deposit N5million cash (N250, 000 for withdrawal).

@Effectively for any cash amount above the limits, you will pay N30 for every N1000 withdrawal (N50 for company) and N20 for every N1000 deposit (N30 for company).”

He noted that the new policy would affect supermarkets and retailers with a lot of cash takings, and even tax collectors who collect taxes in cash.

He explained further that, “You can avoid the charge by using POS and other forms of electronic payments instead of cash. And politicians who buy votes,”

He expressed that, “Without careful implementation with relevant exemptions, this policy will negatively affect financial inclusion and further complicates ease of doing business for small businesses.

“And what happens where there is “no signal” or “network not available” for pre-payment? Plus the tax man may seek to disallow the charge as an unnecessary fine.

“It would have been more tenable for the CBN to give sufficient advance notice, and phase the implementation with progressive charges to enable people doing legitimate businesses make necessary adjustments. For e-payment (not pre-payment).”

According the circular by Okojere, the apex bank implementation of the policy would signal the imposition of charges on deposits in addition to already existing charges on withdrawals.

He noted that the charges would attract three per cent processing fees for withdrawals and two per cent processing fees for lodgments of amounts above N500,000 for individual accounts.

“For corporate accounts, the apex bank in the circular said that Deposit Money Banks (DMBs) would charge five per cent processing fee for withdrawals and three per cent for lodgments of amounts above N3million,” the circular signed by Okojere noted.

He, however, disclosed that the charge on deposits would apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers states as well as the Federal Capital Territory.

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