Brisbane headquartered EML Payments Limited (ASX EML) provides prepaid payment services in Australia, Europe, and North America. Its portfolio of payment solutions offers options for disbursement payouts, gifts, incentives, and rewards, as well as white label payments and banking-as-a-service technology. The company issues mobile, virtual, and physical card solutions for various corporate brands. It serves blue-chip financial institutions, non financial corporates, SMEs, FinTech companies, public sector, and NGO bodies.
EML Payments was being investigated by the Central Bank of Ireland for regulatory concerns and EML shares went on a trading halt yesterday. This morning, following the announcement with the regulatory update, the EML Payments share price tanks today on the ASX charts. It plummeted 41% lower at the time of writing and are trading at $3 a share.
The Central Bank of Ireland’s (CBI) concerns are regarding one of EML’s subsidiaries – PFS Card Services Ireland Limited (PCSIL). The regulator has raised concerns regarding PCSIL’s Anti-Money Laundering / Counter Terrorism Financing, risk and control frameworks and governance. The Correspondence states that the CBI is minded to issue directions to PCSIL pursuant to section 45 of the Central Bank (Supervision and Enforcement) Act 2013.
While this does not concern EML Payments’ businesses in Australia, North America, or in the UK, it does EML’s entire European activities may be at risk under Irish authorization. In the most recent quarter, revenues from Europe account for 27% of EML’s overall revenues.
The CBI has now invited PCSIL to provide it with submissions in relation to the concerns, which PCSIL intends to do by 27 May 2021. Given the announcement and the possibility of striking not just 27% of their revenues, but may also lead to investigations in other regions, the EML Payments share price has come under immense pressure today.
Given the timing and early stages of discussion with the CBI, EML news state that it is presently unable to estimate the potential direct and consequential costs (including but not limited to legal costs) and impacts of the Correspondence on the Group’s consolidated FY21 results. This has created a lot of uncertainty among EML stock investors.
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