The announcement comes at a time when Australia is dealing with the aftermath of a massive money laundering scandal at its biggest bank.

Australia’s big bankers would have almost half of their pay deferred for four years under proposed legislation that seeks to clean up the country’s financial services sector that has been rattled by scandal.

Executives and board members earning A$500,000 ($400,000) or more will have to defer a portion of their bonus under the Banking Executive Accountability Regime Bill. Expected to take effect next July, the laws will demand more clarity on the accountability obligations of banks and their key players, while raising the stakes for regulatory breaches. 

Hurt by a string of scandals, with the most recent having taken place at the nation’s largest lender, Commonwealth Bank of Australia, banks have been trying to fend off calls from the opposition party for a wide-reaching inquiry into the sector, known as a royal commission. 

The Australian Prudential Regulation Authority (APRA) will be handed stronger powers under the draft laws, which will include the ability to levy civil penalties of as much as A$210 million in the event of compliance lapses.

The new rules would pen a new definition of a so-called accountable person – a senior executive or board member who oversees a part of a bank – and would require them to register with authorities. In the UK, its main watchdog is extending its prolific accountability regime to all areas of financial services, encompassing wealth managers for the first time. 

Australia’s move to make it easier to hold senior bankers accountable for failures under their watch comes just weeks after a deep probe into alleged money laundering was sparked at CBA. 

In early August, financial intelligence and regulatory agency Austrac launched civil penalty proceedings against the bank for “serious and systemic non-compliance” with rules designed to stymie flows of dirty cash. 

The scandal has already shaved billions off CBA's market value and has sent shockwaves through Australia's financial services sector.

Ian Narev, CBA’s chief executive, announced he would step down from the helm before the end of the 2018 financial year. Last week, the CEO of the bank’s wealth management division, Annabel Spring, said she would leave the group in December.