The EML Payments Ltd (ASX: EML) share price is having a nightmare on Halloween.
In morning trade, the payments company's shares have crashed 30% to a new multi-year low of 44 cents.
This means the EML share price is now down almost 90% since the start of the year.
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Why is the EML share price crashing?
Investors have been hitting the sell button in a panic this morning after the company announced that it has been hit with another regulatory bombshell.
According to the release, the company has agreed to temporarily cease onboarding new customers, agents, and distributors to its UK subsidiary, Prepaid Financial Services. This follows concerns raised by the UK Regulator, the Financial Conduct Authority (FCA).
The release notes that these measures will allow Prepaid Financial Services UK to address concerns highlighted by the FCA. While not specified, it advised that the concerns are similar in nature to those (anti-money laundering shortcomings) raised by the Central Bank of Ireland relating to the PFS Card Services Ireland business.
Management notes that the financial impact of this temporary measure is expected to reduce group revenue by less than $5 million in FY 2023.
And while such a sharp decline by the EML share price might seem excessive for a $5 million revenue hit, investors appear concerned about what might come next. Particularly given how the Central bank of Ireland has not yet decided on what action to take with the PFS Card Services Ireland business, which is responsible for its entire European operations.
EML's CEO, Emma Shand, commented:
It has been my priority to work constructively with the Regulators. EML accepts that it has not moved quick enough in the past to address regulatory concerns in the PFS business. We need to do better, and we will. We have made some key senior management appointments and are putting more resources into building capability in key areas including governance, risk management and regulatory compliance. We understand we have an important role to play in tackling financial crime and to keep our customers safe, at a time that threats are ever increasing across the banking and payments sectors.
