The President has signed the Central Bank Act (Individual Accountability Framework) 2023 into law.
The legislation gives the Central Bank new powers to hold individuals accountable for willfull wrongdoing in the financial sector.
It following the recommendations of a report by the Central Bank, published in mid-2018.
"It's certainly a very significant change," said Patricia Callan, director of Financial Services Ireland. "There will be this new, enhanced, senior executive accountability regime where named individuals will be responsible for every aspect of the business."
That will require clear reporting lines within firms, and evidence that all reasonable steps were taken to avoid mistakes.
"Obviously things can go wrong in individual businesses, but it's how you deal with them that's important," Ms Callan said.
The new regime will also require enhanced fitness and probity regimes for named individuals appointed to control functions, and enhanced conduct standards for all staff.
The Central Bank will also no longer need to prove wrongdoing at firm-level before it is able to pursue individuals.
Following the signing of the bill, the Central Bank will now hold a public consultation on the details of the regulation regime it plans to introduce.
"All of the detail will be coming from the Central Bank by way of regulation," Ms Callan said. "We're hoping that process will kick off very shortly - we understand it's already in draft."
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It will then be up to financial services firms to amend their structures and contracts to adhere to the new requirements.
"There's a huge body of work for the 150 companies that are going to be affected in terms of getting ready," Ms Callan said. "It's important that it's very detailed in terms of what the Central Bank is asking firms to do."
The Government had previously indicated that it wanted the new rules in operation by the end of this year, however Ms Callan said that timeframe was no longer realistic.
"The law is very late so it's absolutely inconceivable that, if the Central Bank consultation is taking six months, that you'd manage to turn around all of those individual conversations and changes to people's contracts and responsibilities in three months," Ms Callan said.
"We're certainly calling for a 12 month implementation timeframe."
