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Shares in embattled fintech EML Payments have plunged again after Ireland’s central bank found deficiencies in the company’s program for dealing with anti-money laundering risks.
EML’s financial outlook was thrown under a cloud last year, after it revealed it was being probed by the Central Bank of Ireland over “serious” concerns regarding company’s anti-money laundering and counter-terrorism compliance systems.
EML Payments chief executive Emma Shand.
Investors’ hopes were buoyed somewhat in November, when greater clarity emerged and EML said the central bank would limit EML’s growth for 12 months or less, provided it properly implemented a remediation plan.
But on Monday, Brisbane-based EML said its Irish subsidiary PFS Card Services had more to do to satisfy the regulator, and it expected the “assurance” phase of its remediation plan would be finalised in 2023.
“The central bank has constructively engaged with PCSIL and identified shortcomings in components of the remediation program, principally the sequencing and approach taken to the risk assessment of its distributors, corporates and customers,” EML said in a statement.
The company said the growth restrictions that Ireland’s central bank had placed on EML had been due to expire at the end of this year, but it did not know whether it would face any further regulatory direction or “limitation”. Its new chief executive, Emma Shand, was “actively engaging” with the central bank, it said, and it highlighted that its business should benefit from rising interest rates.
In afternoon trading, EML shares had plummeted 20 per cent to 96 cents. In the past year, its share price has tumbled about 75 per cent, after several negative surprises announced by the company, and a wider rout in the market valuations of many fintechs.
Morningstar analyst Shaun Ler said the ongoing regulatory uncertainty was significant for EML because about 60 per cent of EML’s revenue came from its European business.
Ler, who thinks the stock has been oversold, said the announcement suggested the year ahead would be a softer one for EML, in contrast to some market hopes of a stronger period for the business.