The Czech Republic’s financial watchdog, the Czech National Bank (ČNB), has highlighted flaws in banks’ and other institutions safeguards against information systems failures and steps to counter organized crime and terrorism in its report on 2010. The report, published Thursday, highlights the increased risks to financial institutions from the growing trend of outsourcing information and technology services and increased reliance on the systems.
Stepped-up checks by the central bank in 2010 showed up failings in the compilation of data about systems failures and evaluations of the overall risk from them. Testing and updating of emergency plans for such breakdowns, auditing of information systems risks, and security safeguards for such systems were also found wanting, according to the ČNB report. Banks, insurance companies and brokerages were all identified as having insufficient safeguards against information system and IT failures.
Lax laundering checks
Checks on institutions in accordance with anti-money laundering and counter financing of terrorism legislation were also found to be lacking, the report said. Client checks were not properly carried out, risk factors relating to certain deals or clients not established, and flaws in tracking and detection of suspect deals, it added.
Steps to counter money laundering and pinpoint suspicious deals have been given high priority worldwide in a bid to starve terrorist and criminal organizations of funds and prevent them from transforming “dirty money” into legitimate, above board business.
The special Czech police squad for combating organized crime (ÚOOZ) this week drew attention to the increased trend of criminal gangs forcing legitimate businesses to go bust, for example by exorbitant protection payments, and then taking them over once they had gone to the wall.
More debt monitoring
The bank report also highlighted Czech’s ever increasing debts and checks in debtors through a central debtors’ register. The number of debtors registered in the central system rose from 497,726 in 2009 to 539,540 at the end of 2010 with an almost equal rise in the number of business and individual listings.
The number of debt profile checks, mostly carried out by banks and other institutions offering credit, climbed by around 15 percent over the year.