Fintech EML retains Arthur Cox and PwC amid Irish unit concerns

Central Bank considering taking action against Meath-based PFS Card Services

EML bought Prepaid Financial Services last year, which was founded by Co Meath couple Valerie and Noel Moran in 2008. Photograph: Alan Betson/The Irish Times

EML bought Prepaid Financial Services last year, which was founded by Co Meath couple Valerie and Noel Moran in 2008. Photograph: Alan Betson/The Irish Times

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Australian fintech EML Payments has retained solicitors Arthur Cox and professional services firm PwC to help it deal with a Central Bank of Ireland (CBI) investigation into its Irish unit.

The services of the two firms is expected to cost EML less than 2 million Australian dollars (€1.27 million) in its current financial year to the end of June, the Sydney-listed company said in a trading update this week.

Shares in EML tumbled 46 per cent on May 19th as it revealed the Central Bank was considering taking action against Trim, Co Meath-based PFS Card Services (Ireland) Ltd, part of Prepaid Financial Services (PFS), which the Australian group bought last year in a deal worth up to £186.5 million (€216.2 million). Arthur Cox provided legal advice to EML on that deal.

The Central Bank’s concerns relate to anti-money-laundering and counter-terrorism financing matters, risk, control frameworks and governance at PFS Card Services (Ireland).

Restrict

EML warned at the time that the Central Bank had indicated it may restrict the activities of PFS Card Services (Ireland), which is responsible for PFS’s European business and accounted for 27 per cent of group revenues in the first three months of the year. The European business mainly operated through PFS’s UK-regulated subsidiary until the end of last year, when it was transferred to the Irish unit as a result of Brexit.

“EML remains in an ongoing dialogue with the CBI in relation to their concerns through substantial responses, data and access to our teams,” the company said in the trading update. “There is no statutory timeframe for the CBI to finalise its consideration of the matter.”

EML has set up a project governance structure to assist the local team in Ireland, including a subcommittee of the group board, members of its executive team and external expert regulatory consultants and legal resources, it said.

EML said that it cannot determine the financial impact of the matter on its results for the upcoming financial year. It added that the ongoing engagement with the Central Bank “may see an impact of delayed programme launches”, potentially affecting its income.

Still, EML’s share price has recovered half of the losses sustained when the investigation was revealed last month.