The Australian buyer of prepaid financial services in Ireland took another hit after the Central Bank of Ireland (CBI) raised a question mark over Irish business development plans purchased last year that are already under intense and costly regulatory scrutiny.
In an update to the Australian Stock Exchange, EML said it had “received more correspondence” from CBI about regulatory concerns.
EML previously said the central bank’s concerns originally reported in May related to Irish financial services firm AML/CFT, risk management and oversight frameworks.
While EML said the potential regulator’s latest guidance is more limited than originally reported, the regulator has raised questions about Irish business growth plans.
“As currently framed, EML sees that the trend could materially impact the European operations of its prepaid financial services (PFS) business,” said EML.
The company said the central bank had advised it that the Irish unit should have certain limits in place for programs that, if implemented, the EML says, would have a negative impact.
The central bank called on the company to respond to the latest developments by October 28.
EML last year bought PFS for Noel and Valerie Moran in a deal that acquired 171 million euros. The final price is now expected to fall again with Morans expected to receive only £8m (€9.4m) from a potential £55m profit from the sale, as this higher figure was contingent on realizing Prepaid Finance Services (PFS). ) Agreed. Three-year earnings targets beginning in 2021 that are no longer expected to be met.
Instead of growing the business, EML became involved in a major organizational rehabilitation program. The company said in August that the costs and provisions for responding to the central bank’s investigation currently amounted to A$11.4 million (€7 million).
These costs relate to correction, advice and “other expenses” related to the investigation.
EML has hired law firm Arthur Cox and professional services group PwC to work in connection with the investigation.
In addition, she has established a project management structure to assist her team in Ireland, including a subcommittee of the EML Board of Directors and members of the company’s executive team.
The CBI investigated various aspects of the prepaid business “from governance, sourcing, reporting, risk methodologies, controls and risk frameworks, capital adequacy, safeguards, and transaction control perspective,” EML said in its August annual report. .
In May, shares in EML plummeted nearly 50 percent after a two-day hiatus in trading, following an announcement from the company about an investigation into PFS. Shares have recovered somewhat since then, but have remained down 15.3% year-to-date.
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