HSBC 'sorry for mistakes'

The US Senate's investigation into money laundering through HSBC found that a Cayman Islands subsidiary set up by the bank's Mexico division handled some 50,000 clients but employed no staff.

Money from the Cayman Islands had been used to buy jets for Mexican drug lords, according to senators.

Those accounts are in the process of being shut down, the former head of compliance at the bank said.

HSBC's compliance standards have been slammed by the US Senate for allowing its subsidiaries to deal with the proceeds of crimes.

In particular, the bank's Mexican division was singled out for moving some $7 billion (£4.5 billion) into the bank's US business, much of which was tied to drug traffickers.

One former HSBC anti money-laundering director flagged up his concerns that "60 to 70 percent of laundered proceeds in Mexico" was going through the bank's local affiliate.

The revelations about HSBC occupy several front pages of British newspapers. Here's a selection of the headlines:

• Daily Mail: HSBC let drug gangs launder billions
• The Times: HSBC was used to 'clean drugs money'
• Guardian: HSBC shame over cash for drug barons
• Associated Press: HSBC compliance chief steps down after lax controls exposed bank to illegal activity

HSBC has seen its value take a knock after being condemned by a US Senate committee for money laundering.

The banking giant's shares closed down 9.4 pence in London, a 1.69 % drop.

The group is set for a massive fine from the US Justice Department, which some analysts estimate could be $1 billion.

Subcommittee chairman Senator Carl Levin said HSBC used its US bank as a gateway into the American financial system for its affiliates around the world while "playing fast and loose with US banking rules".

He said: "Due to poor anti-money laundering controls, HBUS (HSBC's US operations) exposed the United States to Mexican drug money, suspicious travellers cheques, bearer share corporations, and rogue jurisdictions."

HSBC's head of compliance David Bagley tells the Homeland Security and Governmental Affairs subcommittee that he will be handing over his responsibilities to a new person.

Mr Bagley said he had told senior management that it was the "appropriate time" for "someone new to serve as the head of group compliance".

In his written submission, he said HSBC had "learned a number of valuable lessons" and partly blamed the oversights on the bank's rapid growth.

The head of compliance at HSBC has resigned in front of a US Senate subcommittee.

David Bagley stepped down from a 20-year career after it emerged that HSBC had exposed the US to billions of dollars worth of money laundering, drug trafficking, and terrorist financing.

A Senate report found the bank acted as a financier to clients routing funds from the world's most dangerous corners, including Mexico, Iran and Syria.

Mr Bagley said: "Despite the best efforts and intention...HSBC has fallen short of our own expectations and the expectations of our regulators."