The EML Payments Ltd (ASX: EML) share price has returned from its trading halt and is crashing lower.
In morning trade, the payments company's shares are down a massive 52% to a 52-week low of $2.47.
Why is the EML Payments share price crashing lower?
Investors have been selling the company's shares this morning after it revealed that its Irish regulated subsidiary, PFS Card Services Ireland Limited (PCSIL), has received correspondence from the Central Bank of Ireland raising significant regulatory concerns.
According to the release, the central bank's concerns relate to PCSIL's Anti-Money Laundering / Counter Terrorism Financing (AML/CTF), risk and control frameworks, and governance.
The correspondence states that the central bank is inclined to issue directions to PCSIL pursuant to section 45 of the Central Bank (Supervision and Enforcement) Act 2013.
There are a number of possibilities in this section, one of which is the revoking of its financial service provider authorisation.
Is this a big deal?
As you might have guessed from the EML Payments share price reaction today, this could potentially be a very big deal.
Following Brexit, EML Payments moved the European operations of its Prepaid Financial Services to Ireland. As a result, during the third quarter of FY 2021, the company estimates that approximately 27% of its global consolidated revenue derived from programs operating under PCSIL's Irish authorisation.
The central bank has invited PCSIL to provide it with submissions in relation to the concerns. The company advised that it intends to do so by 27 May 2021.
In the meantime, the central bank and PCSIL are in close dialogue regarding the concerns raised. Furthermore, PCSIL is working with the bank to assist it with receiving information and documentation relevant to its concerns.
EML concluded: "EML welcomes the opportunity to engage more closely with the CBI in relation to the matters raised and PCSIL's business model more generally. EML is committed to cooperating with the CBI and is taking steps to address concerns raised."
FY 2021 guidance
Failing to give the EML Payments share price a lift today an update on its guidance.
The release explains that, excluding any potential costs relating to the above, EML Payments is on course to achieve its guidance in FY 2021.
This will mean underlying revenue in the range of $180 million to $190 million and underlying net profit of $30 million to $33.5 million.