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• Published on 25 July 2025
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 11 September 2026
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Published on 11 September 2026
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Another week, another global bank finds itself in the headlines for all the wrong reasons. This time it’s Standard Chartered, facing a rather eye-watering $2.7 billion lawsuit over its alleged part in the 1MDB fraud scandal. Honestly, at this point, are we even surprised? It seems that for every ten bankers working diligently, there’s one finding a creative way to help a kleptocrat misplace a country’s sovereign wealth fund.
To me, these scandals are becoming as predictable as rain in Manchester. The script is always the same. A complex web of shell companies, a few billion dollars vanishing into thin air, and a major financial institution left holding the bag, looking utterly bewildered. The details of the 1MDB case are particularly galling, with claims that the bank waved through enormous transactions that should have set off more red flags than a May Day parade in Moscow.
Now, you might think the story here is the colossal fine. But I think that misses the point entirely. A $2.7 billion lawsuit isn't just a punishment, it's a very expensive invoice for a technology upgrade the bank probably should have bought years ago. Regulators are making it painfully clear that the cost of getting caught far outweighs the cost of getting compliant.
For years, compliance departments in big banks were seen as a necessary evil, a cost centre staffed by people who said "no" a lot. That view is changing, and fast. The sheer volume of transactions flying around the globe today makes human oversight a fool's errand. You can’t expect a team of people, however sharp, to spot a single fraudulent needle in a haystack of a billion digital transfers. It’s simply not possible. This realisation is forcing a massive, and I believe long-term, spending spree.
This is where a rather interesting corner of the market comes into play, the so called RegTech sector. These are the companies building the digital bouncers for the world’s financial nightclubs. They provide the sophisticated tools that banks now desperately need to spot trouble before it lands on the front page of the Financial Times.
Take a company like ACI Worldwide. It creates the kind of fraud detection software that can sift through millions of payments in real time, looking for patterns that a human would miss. Then you have firms like Mitek Systems, which focus on making sure customers are who they say they are. A robust identity check, or ‘Know Your Customer’ process, is the first line of defence. It’s much harder to run a multi-billion dollar scam when you can’t hide behind a fake name and a dodgy passport. Even a giant like Equifax plays a role here, helping institutions verify identities and manage fraud risk. These aren't glamorous, consumer-facing businesses, but they are becoming the essential plumbing of a cleaner financial system.
So, what’s the takeaway for an investor? To me, this creates a rather compelling, if slightly cynical, investment theme. You’re not betting on a bank’s sudden turn to moral purity. You’re betting on the certainty that financial crime will continue to exist and that regulators will continue to chase it. As long as those two things remain true, the demand for these technological solutions could remain incredibly strong. It’s a classic cat and mouse game, and these companies are selling better mousetraps.
This is the core idea behind themes like the Financial Crime Fighters, which groups together the companies providing these essential services. Of course, it’s not a risk-free proposition. Technology moves quickly, and competition is fierce. But the fundamental driver, the desperate need for banks to protect themselves from both criminals and regulators, isn't going away anytime soon. In fact, it’s probably only going to get stronger.
View the full Basket:Financial Crime & Compliance
View the full Basket:Financial Crime & Compliance
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 12 September 2026
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Published on 11 September 2026
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Published on 11 September 2026
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