HSBC Holdings Plc told a US Senate panel today that it has dealt head-on with allegations of pervasive money-laundering through bank accounts.
It said it has overhauled how it polices transactions, exited lucrative businesses and shaken up executive leadership.
HSBC offered up the changes after the Senate's Permanent Subcommittee on Investigations released a report accusing the British bank of a "pervasively polluted" culture.
The report underscored money-laundering problems that have been flagged by regulators for nearly a decade.
It said the bank routinely acted as a financier to clients routing funds from the world's most dangerous corners, including Mexico, Iran and Syria.
During a hearing on the Senate report, David Bagley, a top compliance executive at HSBC since 2002, said he would step down.
Senator Carl Levin, who chairs the Senate's Permanent Subcommittee on Investigations, began the hearing by detailing how HSBC's lapses have systematically allowed suspicious actors to access the US banking system.
"Accountability for past conduct is essential. That's what's been missing here," Mr Levin said, adding that the bank's charter could be at risk if it did not do better.
Mr Bagley told the hearing that while reforms had been made at HSBC, it was time for him to go.
"I recommended to the group that now is the appropriate time for me and for the bank, for someone new to serve as the head of group compliance," he said.
Mr Bagley also told the Senate panel that the bank would close thousands of Cayman Islands accounts as part of its renewed compliance efforts.
"That's good news," Mr Levin said.
The Senate report detailed how between 2007 and 2008, HSBC's Mexican operations moved $7bn into the bank's US operations.
Both Mexican and US authorities warned HSBC that the amount of money could only have reached such a level if it was tied to illegal narcotics proceeds, the report said.
It also examined banking HSBC did in Saudi Arabia with Al Rajhi Bank, which the report said has links to financing terrorism.
