EML Payments, the Australian fintech company which bought Prepaid Financial Services, may face a class action lawsuit over how it informed shareholders of the Central Bank of Ireland’s money-laundering concerns at its Irish division.

Australian law firm Shine Lawyers has said it is seeking compensation on behalf of shareholders who suffered losses after acquiring EML shares. It is looking for those who acquired shares between December 19, 2020, and May 17, 2021, to join a class action advertised on its website.

According to one of Shine’ online notices regarding EML, class actions practice leader Joshua Aylward said the firm was investigating whether EML’s delayed response to the letter breached continuous disclosure laws. It would also consider whether EML engaged in misleading or deceptive conduct.

“EML did not request a trading halt for almost four days after learning of these concerns and then took another 48 hours to inform the market,” he said. “When shareholders invest their money into a company, they do so with the belief that that company will comply with its continuous disclosure obligations.

“Our claim will allege that EML failed in its obligations, significantly impacting share prices for thousands of investors.”

Neither EML or Shine responded to a request for comment on the potential class action.

In May, EML made a market announcement regarding correspondence that its Co Meath-based subsidiary, PFS Card Services Ireland Limited, had received from the Central Bank of Ireland.

The Central Bank raised in the correspondence its concerns relating to anti-money laundering/counter-terrorism financing, risk and control frameworks and governance at the Irish firm.

EML said the Central Bank could issue directions that would materially impact its European operations.

PFS’s European business accounted for 27pc of group revenues in the first three months of the year. The company operated through its UK-regulated subsidiary until the end of last year when it was transferred to Ireland due to Brexit.

Following the announcement on the Central Bank’s concerns, EML’s share price fell by around 45pc.

In a trading update for the third quarter of its financial year, EML said it had retained solicitors Arthur Cox and professional services firm PwC to help it with the Central Bank of Ireland investigation. According to the update, the immediate one-off costs for legal and professional advisory fees are expected to be less than AU$2m (€1.27m) in its 2021 financial year.

EML said it could not fully determine the financial effect of the Central Bank of Ireland investigation on its upcoming fiscal year. It added in the trading update that it “may see an impact of delayed programme launches” and transaction fees.

In its trading update, EML said it remains in ongoing dialogue with the Central Bank regarding its concerns. It set up a project governance team to assist the Irish branch, and is also engaging with regulators in other regions.

Since the announcement of the Central Bank investigation, EML has recovered half of the share price loss it sustained.

Last year, EML bought PFS in a deal worth up to €216.9m.