On Twitter today, public-listed Australian payment processor EML Payments (www.emlpayments.com) is at the center of a discussion surrounding well-known Wirecard hunter Fraser Perring. It is about the accusation of fraudulent merchants and KYC issues in the EML network. Last year, EML acquired Sentenial and its open banking brand Nuapay for A$112.7M. However, EML Payments announced it discovered fraudulent merchants within the Sentenial direct debit processing business.
The Brisbane-headquartered EML Payments said it identified a fraudulent set of merchants within the direct debit processing division of its Irish subsidiary Sentenial. These fraud activities may result in up to $7.9 million of losses.
Following the information, EML shares hit a near seven-year low. The stock is down 17% at 82.5 Australian cents (57.2 U.S. cents), making it the worst-performing component of the S&P/ASX 200 benchmark index after Wednesday morning trade. EML‘s share price is down 75% so far in 2022.
The fraud case is an early test for Emma Shand (LinkedIn), the recently appointed new managing director and CEO, who took control of the business in July.
In July, the Central Bank of Ireland (CIB) identified shortcomings in its remediation program for EML‘s Prepaid Card Services Ireland Limited subsidiary. EML’s prepaid cards business already attracted regulatory scrutiny over alleged anti-money-laundering shortcomings in May 2021, which has led to a sustained fall in its share price and prompted much higher investment in compliance systems and personnel.
