EML said the Irish regulator, the Central Bank of Ireland, had raised red flags over the money laundering and terrorism financing risk at its PFS Card Services business (known as PCSIL).

EML only bought the company in 2019 for $423 million and has already run into regulatory trouble in England.

It said the Central Bank of Ireland was likely to issue directions under the supervision and enforcement legislation.

“The directions, if made, could materially impact the European operations of the Prepaid Financial Services business, including potentially restricting (its) activities under Irish authorisation,” EML said.

“During the period of January 1 2021 to March 31, 2021, EML estimates that approximately 27 per cent of EML’s global consolidated revenue derived from programs operating under PCSIL’s Irish authorisation.

“Given the timing and early stages of discussion with the CBI, EML is presently unable to estimate the potential direct and consequential costs and impacts of the correspondence on the group’s consolidated 2021 results,” EML said this morning.

It said the central bank’s concerns related to anti-money laundering and counter terrorism risk and control frameworks and governance. It does not concern EML’s other businesses in Australia, North America or PFS’ UK subsidiary.

CBI has asked PCSIL for submissions in relation to its concerns which the company should be finalised by May 27.

EML said PCSIL was co-operating with CBI.

It said because there was so much uncertainty about the potential impact of the investigation and potential directions, it could estimate the impact and so its earnings guidance would remain the same.

EML shares were regained much of the early losses but were still down by more than 30 per cent before midday.

One of EML’s backers Ron Shamgar from equities company TAMIM said the news was not great but management was savvy and it would survive.