CZECH REPUBLIC: Whistleblower Protection Takes Effect for Financial Institutions
New Requirements for Financial Institutions
As of August 1st, financial institutions in the Czech Republic are now required to establish whistleblower channels and comply with stricter reporting requirements. This is a result of the country’s belated implementation of the EU’s Whistleblowing Directive.
Who is Affected?
The new Whistleblowing Act applies to:
- Most state authorities
- Contracting authorities in public procurement processes
- All employers employing 50 employees or more as of January 1st each year
Note that financial institutions were already required to set up whistleblowing channels under existing anti-money laundering legislation, making them exempt from the new requirements.
Broadened Scope of Reporting Misconduct
The scope of reporting misconduct has been broadened beyond the original directive to include actions that violate various laws and regulations, such as:
- Financial
- Tax
- Consumer protection
- Environmental protection
- And more
Obliged entities must publish information on their whistleblowing channels, report handling procedures, and contact details.
Protection for Whistleblowers
Protection under the Whistleblowing Act is extended to individuals who have performed or are performing work-related activities for an obliged entity, including:
- Freelancers
- Suppliers
- Volunteers
Reporting can be done in writing or verbally, with the option for in-person meetings if requested by the reporting person.
Compliance Requirements
Companies with fewer than 250 employees can share a whistleblowing channel with other entities, while larger companies must set up their own internal system. The operation of a reporting channel may also be outsourced to third-party service providers.
Consequences for Non-Compliance
The Whistleblowing Act imposes fines on individuals and entities for non-compliance, including:
- False reporting
- Breach of duties
- Retaliation against whistleblowers
Fines range from €2,100 to €42,000, with additional penalties for obstructing reporting or revealing the identity of whistleblowers without consent.
Conclusion
As financial institutions in the Czech Republic adapt to these new regulations, it is crucial that they prioritize transparency, confidentiality, and protection of whistleblower identities to ensure effective reporting and compliance.