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THE CENTRAL BANK OF NIGERIA REGULATORY UPDATE: REVISED CASH POLICIES AND AUTHORISED PUSH PAYMENT FRAUD GUIDELINES

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BY SEUN TIMI-KOLEOLU AND OMODELE FATODU

Introduction

The Central Bank of Nigeria (“CBN”) has recently issued two regulatory communications: (i) the Revised Cash-Related Policies, effective 1 January 2026; and (ii) the Draft Guidelines for Handling Authorised Push Payment (“APP”) Fraud. Both documents introduce new operational requirements for financial institutions and provide guidance for customers, lenders, and payment service providers.

1. REVISED CASH-RELATED POLICIES – Key Changes

  1. Removal of Cash Deposit Limits – The CBN has abolished previously applicable cash-deposit limits. Under the former regime, customers were subject to cumulative deposit limits and charges for excess cash deposits. These thresholds and associated fees have now been completely removed.
  2. Upward Adjustment of Withdrawal Limits – Individuals may now withdraw up to ₦500,000 weekly, while corporate entities may withdraw up to ₦5 million. Withdrawals exceeding these limits will attract processing fees of 3% for individuals and 5% for corporate entities.
  3. Elimination of Special Withdrawal Authorisations – The requirement for customers to seek special CBN approval for unusually large cash withdrawals (previously ₦5 million for individuals and ₦10 million for corporate entities) has been discontinued.
  4. Enhanced Obligations for Financial Institutions – Banks are required to ensure that ATMs remain adequately funded and stocked with various denominations. They must maintain a designated account for processing fees charged on withdrawals above the stipulated limits. Banks are also required to submit specified periodic reports, including returns on cash withdrawals above the specified limit and returns on cash deposits to the CBN to support ongoing compliance and supervision.

2. CBN DRAFT GUIDELINES ON APP FRAUD

What is APP Fraud?

APP fraud occurs when a customer is tricked into voluntarily initiating a payment to an account controlled by a fraudster. Although the customer authorises the transfer, it is done under false pretences through deception, manipulation, impersonation, or other fraudulent means.

Key Highlights

  1. Standardised Reporting Framework for Fraud Incidents – Customers are required to report suspected or actual APP fraud to their financial institution within 24 hours, with allowance for reporting within 72 hours where reasonable justification is provided. The guidelines state that “reasonable justification” may include, but is not limited to, circumstances beyond the control of the customer such as illness, force majeure events, time of becoming aware of the fraud, security constraints, or demonstrable unavailability of reporting channels. Upon receiving a report, the institution must acknowledge receipt within 24 hours, open a case file, and begin processing the complaint in line with the guidelines.
  2. Mandatory Inter-Bank Notification within 30 Minutes – Where an APP transaction involves more than one financial institution, the institution that first receives the complaint must notify the other insitiution within 30 minutes of receiving the customer’s complaint.
  3. Defined Timelines for Customer Refunds – Where a customer is entitled to a refund, the responsible institution must complete it within 48 hours after concluding the investigation. In cases involving multiple institutions, refunds must be completed within 16 working days of the complaint.
  4. Strengthened Fraud-Prevention and Consumer-Protection Duties – Financial institutions must provide 24/7 fraud-reporting channels and implement an early warning system to prevent and detect APP fraud in a timely manner. They are required to ensure that customers are aware of available reporting channels and receive clear, accessible, and ongoing education on APP fraud risks and reporting procedures. Financial institutions must also carry out quarterly APP fraud awareness campaigns across multiple media and languages, and ensure that any information shared with other institutions complies with the Nigerian Data Protection Act 2023.
  5. Customer Refund Eligibility – Refund eligibility is subject to the following conditions:
    • The customer authorised the transaction under false pretence and had no reason to suspect fraud;
    • The customer reported the fraud within 72 hours and cooperated with the investigation;
    • There is no evidence of negligence, collusion, or criminal intent by the customer; and
    • The financial institution failed to implement appropriate fraud detection, warning, or verification protocols that could have prevented the transaction.

    Financial institutions are not obligated to reimburse where:

    • The customer acted fraudulently or negligently;
    • The customer delayed reporting beyond 72 hours without reasonable justification; and
    • The transaction occurred before the effective date of the guideline, unless the institution voluntarily applies it retroactively.

Conclusion

CBN’s Revised Cash-Related Policies and Draft Guidelines on APP Fraud introduce updated operational requirements that affect both financial institutions and customers. Banks and payment service providers should review these documents to ensure compliance ahead of the effective dates, while customers should familiarise themselves with the reporting procedures and eligibility criteria to protect their interests in cases of APP fraud.

NIGERIA’S VALUE ADDED TAX (“VAT”) REGIME; REGULATORY UPDATE

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By Aderonke Alex-Adedipe and Feyijuwa Akinyanmi

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Introduction

The Federal Inland Revenue Service (FIRS) as an agency of the Federal Government, has been solely responsible for the administration and management of VAT assessment and collection in Nigeria. The judgment delivered by the Federal High Court, Port- Harcourt Division on 9th August, 2021, in AG Rivers State v. FIRS & AG Federation[1]  has effectively barred the FIRS from administering, Nigeria’s VAT regime.

This newsletter discusses the implications of the decision of the Federal High Court as well as subsequent events which have occurred after the court’s decision.

What is VAT?
VAT is a consumption tax paid on all goods and services provided in or imported into Nigeria. VAT, which is currently charged at the rate of 7.5% is payable by individuals, companies, and government agencies. Certain goods and services including medical and pharmaceutical products, medical services basic food items, books and educational materials, exports e.t.c. are exempt from VAT. The VAT Act, 1993 (as amended) vests the FIRS with the power to administer the collection VAT from taxable persons in Nigeria.

Implications of the Judgement of the Federal High Court
In the case of AG Rivers State v. FIRS & AG Federation, the Federal High Court provided a literal interpretation of the Constitution of the Federal Republic of Nigeria, 1999 as amended (the “Constitution”), holding that the National Assembly is only empowered to enact laws in relation to stamp duties and the taxation of income/profit and capital gains. The court also held that pursuant to the Constitution, the Federal Government or any of its agencies, lacks the powers to impose and collect VAT, or any other tax not specifically provided for in the Constitution.

The decision of the Federal High Court, until upturned by a superior court, essentially renders the VAT Act and its amendments, void.

By implication therefore, individual states are entitled to enact laws for the administration of VAT and can appoint their respective tax agencies to supervise the collection of taxes within the state. The VAT Act will, however, still be applicable in the Federal Capital Territory and the FIRS will continue to be responsible for the administration of its VAT.

In addition, every state will be entitled to the revenue accruing from the VAT collected by it and VAT from each state will no longer be pooled into the Federation Account.

Lagos State VAT Bill
By virtue of the Federal High Court’s decision on VAT, states like Lagos State and Rivers State have raced to the drawing board to develop their own VAT laws which will govern the administration of VAT in the state.

Lagos State for example, has passed a bill to impose and charge VAT on certain goods and services and to provide for the administration of VAT in Lagos state. The Value Added Tax Bill (“Bill”) has been passed by the Lagos State House of Assembly and awaits the assent of the Lagos State Governor. Some key provisions of the Bill are highlighted below.

1.Rate of Tax: 6% of the value of goods and services as opposed to the current rate of 7.5% imposed by the Finance Act, 2019.

2.Administration of VAT: The Lagos State Internal Revenue Service (LIRS) has been vested with the power to administer VAT in Lagos State. All taxable persons are required to register with the LIRS within 6 months of the commencement of the VAT Law. Failure to comply is considered an offence and is punishable by a fine of N50,000 (Fifty thousand naira) for the first month of default and N100,000 for each subsequent month of default.

3.Returns to the LIRS: Taxable persons are required to render returns to the LIRS on or before the 21st day of the subsequent month after provision of goods and services. Failure to comply will make such person liable to a fine of N500,000. (Five Hundred Thousand Naira) for every month of default.

4.Treatment of non-resident companies: Companies that carry on business within Lagos State but are not resident in the state are required to register with the LIRS using the address of the person with whom it has a subsisting contract for the provision of goods and services. The non-resident company is to make provision for VAT in its invoice and the person to whom the services were rendered or the goods were provided is required to remit the tax to the LIRS.

5.Establishment of the Value Added Tax Tribunal: The Bill also establishes a Value Added Tax Appeal Tribunal which shall assist the LIRS in resolving disputes arising from tax assessments.

6.Sharing formular for revenue accruing from VAT: The Bill provides that the revenue obtained by the Lagos State Government from VAT will be distributed between the state and local governments in the ratio of 75% to 25%.

Conclusion

Many have raised concerns as to the practicability of the administration of VAT at the state level with respect to the taxation of non- residents of the states, the treatment of output and input tax, as well as the taxation of goods imported into the country. The FIRS has also appealed the judgment of the Federal High court on grounds that it is the appropriate agency to administer VAT in the country given the above listed complications. In the event that the appellate court decides against FIRS, it is recommended that the states take up the mantle that has been handed to them and effect necessary measures to ensure that the VAT is administered efficiently.

[1] FHC/PH/CS/149/2020