EML Payments (ASX:EML)
has received a notification from Irish authorities about regulatory concerns surrounding a European subsidiary the payment solutions provider purchased for a discounted price last year.
The Central Bank of Ireland issued a letter addressing loopholes in the business model of EML’s Prepaid Financial Services (PFS).
The Irish corporate regulator highlighted that PFS’ current measures and business model are not adequate in countering money laundering and minimising terrorism financing risks in EU territory.
Irish authorities are now considering an intervention into the regulation process of the company, as Ireland’s central bank “is minded to issue directions” to the card services provider.
EML explained the seriousness of the situation, “The directions, if made, could materially impact the European operations of the Prepaid Financial Services business, including potentially restricting activities under the Irish authorisation,″
Brexit appeared to be the catalyst for the emergence of these legal issues, as the business’ non-UK divisions underwent a jurisdictional transfer from the UK to Ireland. These divisions accounted for over a quarter of EML’s global revenue in the March quarter.
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