EML payments facing Maurice Blackburn class action

Lawyers are investigating a class action against under-fire EML Payments, which is already facing intense scrutiny over compliance with financial crime rules.

EML’s CEO Tom Cregan and head of sales Richard Anderson. Picture: David Geraghty, The Australian.

Class action firm Maurice Blackburn is investigating a shareholder action against under-fire EML Payments, which is facing intense regulatory scrutiny over its compliance with financial crimes obligations.

Maurice Blackburn is questioning Brisbane-based EML’s disclosure timeline to the ASX, and its compliance and governance practices in relation to anti-money laundering and counter terrorism financing laws.

“We are investigating whether EML has breached continuous disclosure laws as set out in

the Corporation Act, or engaged in misleading or deceptive conduct. Under Australian law,

companies are required to inform the market of all relevant developments,” said Maurice Blackburn senior associate Michael Donelly.

“On any reasonable interpretation, it appears the company should have disclosed its

interaction with the Central Bank of Ireland at the first available opportunity.

“On our analysis, this information is of grave concern to shareholders and warrants further

investigation.”

Last month, EML’s shares were pummeled after the Tom Cregan-led group said its PFS Card Services division had received correspondence from the Central Bank of Ireland citing “significant regulatory concerns”.

“The Central Bank of Ireland’s concerns relate to (PFS’) anti-money laundering/counter terrorism financing, risk and control frameworks and governance,” EML told the ASX at the time. It also warned if the Irish regulator made directions against the company it could “materially impact” the European operations of PFS.

Maurice Blackburn highlighted EML had been engaging with the Central Bank of Ireland since mid-December.

The PFS probe comes just over a year after EML acquired the Irish business for $252.3m.

The revelations triggered an almost 46 per cent one-day plunge in the stock to $2.80. It has since retraced some losses to close at $3.92 on Thursday.

In a trading update this week EML said it had responded to the Central Bank of Ireland’s Section 45 letter within a deadline on May 27, and remained in “ongoing dialogue”.

The company set up a new governance structure to assist its team in Ireland and EML said it was “working cooperatively” with the central bank.

Immediate one-off costs amounted to less than $2m so far, primarily for legal and advisory fees, but EML said the total financial impact for the matter in fiscal 2022 could not yet be determined.

Maurice Blackburn says shareholders would expect EML to have “best-practice governance” and to have complied with laws to combat anti-money laundering and terrorism.

“An object of the anti-money laundering laws is to promote public confidence by

the disruption of money laundering. Shareholders are entitled to expect that a company

involved in international finance would have best practice governance and risk control

frameworks and not run foul of regulators,” Mr Donelly said.

EML provides digital banking and payments services, prepaid cards and digital gift cards in jurisdictions around the world, including the Americas and Europe.

It is also pursuing a Finlabs initiative which aims to accelerate payments-as-a-service and banking-as-a-service platform offerings around the world.