Shares in Australian payments company EML Payments fell by nearly 50% overnight after it revealed more details of the regulatory concerns expressed by the Central Bank here about its Irish based PFS Card Services Ireland Ltd (PCSIL) subsidiary.
The company said the regulator's worries relate to PCSIL's anti-money laundering and counter terrorism financing, risk and control framework and governance.
In an update to the Australian stock market, EML Payments said the Central Bank is "minded to issues directions" to PCSIL under Section 45 of the Central Bank (Supervision and Enforcement) Act 2013.
"The directions, if made, could materially impact the European operations of the Prepaid Financial Services business, including potentially restricting PCSIL's activities under the Irish authorisation," an EML statement said.
Last December because of Brexit, Prepaid Financial Services (PFS) moved all its European activities out of the UK where they had been regulated by the Financial Conduct Authority, to PCSIL which is authorised by the Central Bank.
The "significant regulatory concerns" were first communicated to PFS by the Central Bank on Friday in a letter.
EML then asked for trading in its shares to be halted pending a further announcement of the details, which came overnight.
The firm said the concerns do not relate to its Australian or North American operations or its UK subsidiary, Prepaid Financial Services Ltd.
They also do not impact EML's other Irish regulated subsidiary, EML Money DAC.
EML said the Central Bank has invited PCSIL to provide it with submissions in relation to the concerns, and it intends to do so by May 27.
"The CBI and PCSIL are currently in close dialogue regarding the concerns raised and PCSIL is working with the CBI to assist it in receiving information and documentation relevant to its concerns," EML said.
EML said it is not currently able to provide guidance on the potential costs and impacts of the situation on its financial performance this year.
In the first three months of this year EML said around 27% of its global revenue came from the PCSIL operations that have authorisation from the Central Bank.
Its shares were down 46% this morning.
PFS employs around 200 people in Ireland.
It was established in 2008 by husband and wife team, Noel and Valerie Moran.
Last year it completed the sale of the business to EML for AUS$252.3m.
