On 6 November 2012, DNB announced that Microsoft has accepted including an audit right in its Office 365 cloud service contracts with Dutch financial institutions allowing DNB to examine the facilities of Microsoft. In a circular issued in December 2011, DNB imposed a number of specific requirements on financial Institutions when outsourcing services to a cloud provider. Financial supervisory authorities of other countries, such as the United States and Australia, had issued similar circulars. While many of these requirements put obligations on the financial institution only (such as the duty to conduct a risk analysis of the intended outsourcing), DNB also required the financial institution to agree with the cloud supplier on an audit right to examine the supplier’s facilities for the benefit of DNB. Financial institutions that were negotiating agreements with cloud service providers experienced difficulty in agreeing on such supervisory authority audit right and found themselves caught between financial regulations and their service providers.
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