Financial Crime World

Whistleblower Protection Law Comes into Force in Czech Republic

As of August 1, 2023, the Czech Republic has introduced a new whistleblower protection law aimed at safeguarding those who report financial irregularities and other wrongdoing within their organizations.

Key Requirements

  • Financial institutions must establish an internal whistleblowing system
  • Designate a competent person to handle reports
  • Take remedial measures

Protected Whistleblowers

  • Any individual who reports potential misconduct can be protected, including:
    • Former and current employees
    • Job applicants
    • Volunteers
    • Self-employed individuals
    • Others

The report must contain information about the alleged infringement and the whistleblower’s personal data that allows their identity to be inferred.

Applicability

  • Public contracting authorities
  • Certain public bodies
  • Private sector entities with 50 or more employees
  • Companies operating in selected sectors such as financial services

Reportable Acts

  • Criminal offenses
  • Misdemeanors
  • Breaches of the Whistleblower Protection Act
  • Violations of other legislation or EU law

Key Obligations for Entrepreneurs

  • Establish an internal whistleblowing system, including:
    • Setting up a dedicated reporting channel
    • Designating a competent person to handle reports
    • Implementing measures to prevent retaliation against whistleblowers
  • Outsourcing management of the whistleblowing system or sharing it within a group are also permitted

Prohibition of Retaliatory Actions

  • Prohibits retaliatory actions against whistleblowers, including those that could harm their employment or service relationship

Penalties for Non-Compliance

  • Fines of up to CZK 1 million for obligated entities
  • Penalties of up to CZK 100,000 for competent persons

Implementation Timeline

  • Obliged entities with up to 250 employees must implement an internal whistleblowing system by December 15, 2023
  • The Whistleblower Protection Act will enter into force on August 1, 2023

Compliance and Awareness

As the law comes into effect, financial institutions and other obligated entities must be aware of their new obligations under the Whistleblower Protection Act to ensure compliance and protect whistleblowers from retaliation.