It is not an "honor system".
Certificate holders (Part 121 etc.) are subject to over sight and regular audits by their National Aviation Authorities.
From time to time systemic (swiss cheese) failures occur, often when the Certificate Holder is in a tight financial position.
Link to the NTSB Report regarding the accident you are referring to below:
Cheers
https://www.ntsb.gov/investigations/AccidentReports/Reports/AAR0704.pdf