The EML Payments Ltd (ASX: EML) share price is going to be on watch on Friday after the company announced an update regarding the Central Bank of Ireland (CBI).
EML Payments' CBI update
The payments business said that its Irish-regulated subsidiary, PFS Card Services (Ireland) Limited (PCSIL), has received more correspondence from the CBI about the regulatory concerns and potential directions regarding the remediation plan and material growth.
EML stated:
The nature of these potential directions are more limited than those originally foreshadowed by the CBI in May 2021. However, as presently framed, EML considers that the direction could materially impact the European operations of the Prepaid Financial Services (PFS) business.
The remediation program is currently underway and there are governance improvements with the PCSIL board. But, the CBI has advised that PCSIL's proposed material growth policy is higher than what the CBI "would want to see".
Additionally, the CBI has proposed that certain limits be applied to programs that, if implemented, could have a negative impact on the PCSIL business. EML said that, subject to endorsement by the PCSIL board, it is going to present to the CBI a "significant and detailed" analysis of limits applied across almost 27,000 programs in the next week along with a proposed recalibration of limits for certain programs.
Time will tell how the EML Payments share price reacts to this news.
CBI has invited PCSIL to provide it with submissions regarding the potential directions, which PCSIL intends to do by 28 October 2021.
There is an ongoing dialogue with CBI about the remediation plan, which EML said remains on track.
Does this affect the whole business?
No.
EML confirmed that these issues don't relate to its Australian or North American operations, the UK subsidiary which is regulated in England, the other Irish regulated subsidiary (EML Money DAC), Sentenial and Nuapay, EML's French regulated subsidiary.
The company looked to reassure investors by saying it's subject to regular audits by various parties including central banks, payment schemes, external and internal auditors and other third parties.
EML said it takes regulatory compliance, including anti-money laundering and counter-terrorism financing, risk management and governance very seriously, and is committed to ensuring its global operations meet the highest standards of risk and regulatory compliance.
