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UPDATE 1-EML Payments slump 50% as Irish unit faces potential curbs

(Adds details on Irish c.bank concerns, shares, background)

May 19 (Reuters) - EML Payments Ltd said on Wednesday one of its Irish units could face operational curbs after the country’s central bank raised regulatory concerns, triggering a 50% slump in the Australian fintech company’s stock.

The Central Bank of Ireland, in a letter on May 14, flagged issues regarding frameworks on anti-money laundering and counter-terrorism financing at PFS Card Services (Ireland) Ltd (PCSIL), EML said.

The unit, PCSIL, is a part of Prepaid Financial Services (PFS), which EML bought in March last year for A$252.3 million ($196.6 million). PFS made up nearly 40% of EML’s total revenue in the first half of fiscal 2021.

The central bank’s concerns add to PFS’ recent regulatory woes in Europe. It was last month deemed to have broken the law for cartel behaviour when offering pre-paid cards to vulnerable members of society in the UK.

If the central bank chooses to act, it could impact the European operations of PFS business and may even restrict PCSIL’s activities under Irish laws, the payment solutions provider said.

EML shares, which have jumped more than 23% this year amid demand for alternate payment products and services, sank to their lowest level since April 2020 after a voluntary trading halt.

The Brisbane-based company said it was in touch with Ireland’s central bank to examine the unit’s business model.

The Ireland notice does not concern EML’s operations in Australia or North America, its other Irish regulated unit or PFS’ UK subsidiary, it said.

EML had earlier this month expanded into the European open banking market with its acquisition of Sentenial. ($1 = 1.2835 Australian dollars) (Reporting by Anushka Trivedi and Shashwat Awasthi in Bengaluru, Editing by Sherry Jacob-Phillips and Arun Koyyur)

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