Financial Crime World

New Rules Bring Greater Accountability to Irish Financial Sector

The financial sector in Ireland has undergone significant changes with the introduction of new rules aimed at improving accountability and trust. The Individual Accountability Framework Act (IAF Act) has introduced a range of measures to promote good governance, performance, and accountability within Regulatory Financial Services Providers (RFSPs), Certain Financial Institutions (CFIs), and Professional Compliance Functions (PCFs).

Key Changes

  • Senior Executive Accountability Regime (SEAR): SEAR aims to improve governance and accountability by placing obligations on RFSPs and senior individuals to clearly define their roles and responsibilities.
    • RFSPs must prepare documented Statements of Responsibility for each individual holding a PCF role, outlining their role and specific responsibilities.
    • RFSPs must prepare Management Responsibilities Maps detailing their key management and governance arrangements.
  • Common Conduct Standards: Introduced for all individuals performing CF roles, requiring them to act with honesty and integrity, due skill, care, and diligence, and in the best interests of customers.
  • Additional Conduct Standards for Senior Executives: Require senior executives to act with honesty and integrity, due skill, care, and diligence, and in the best interests of customers.
  • Enhancements to Fitness and Probity Regime: RFSPs must proactively certify that staff performing CF or PCF roles comply with the Standards. RFSPs will also be required to document certain information as part of the certification process.

Impact

The IAF Act aims to improve accountability and trust in the financial sector by creating a framework that contributes to cultural and practical change in the banking sector and throughout the financial services at large.

Key Dates

  • April 19, 2023: Certain provisions of the IAF Act came into effect, introducing changes to the CBI’s Administrative Sanctions Procedure.
  • December 29, 2023: Remaining provisions of the IAF Act became effective, including the introduction of Common Conduct Standards and Additional Conduct Standards for senior executives.
  • July 1, 2024: The requirements under SEAR will apply to a limited range of RFSPs.

Guidance and Regulations

  • November 2023: CBI published guidance on the Individual Accountability Framework.
  • Coming months: Guidance on the implementation of SEAR is expected.