Chapter 10. Banking and Bookkeeping

The arguments of lawyers and engineers pass through one another like angry ghosts.

— Nick Bohm, Brian Gladman and Ian Brown [201]

Computers are not (yet?) capable of being reasonable any more than is a Second Lieutenant.

— Casey Schaufler

Against stupidity, the Gods themselves contend in vain.

— JC Friedrich von Schiller

Introduction

Banking systems range from cash machine networks and credit card processing, both online and offline, through high-value interbank money transfer systems, to the back-end bookkeeping systems that keep track of it all and settle up afterwards. There are specialised systems for everything from stock trading to bills of lading; and large companies have internal bookkeeping and cash management systems that duplicate many of the functions of a bank.

Such systems are important for a number of reasons. First, an understanding of transaction processing is a prerequisite for tackling the broader problems of electronic commerce and fraud. Many dotcom firms fell down badly on elementary bookkeeping; in the rush to raise money and build web sites, traditional business discipline was ignored. The collapse of Enron led to stiffened board-level accountability for internal control; laws such as Sarbanes-Oxley and Gramm-Leach-Bliley now drive much of the investment in information security. When you propose protection mechanisms to a client, one of the first things you're likely to be asked is the extent to which they'll help directors ...

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