HSBC
might face fines of around $1 billion by the US authorities and
regulators for ineffective anti-money laundering controls, according to
estimations in UK press.

The Financial Times said the flawed controls failed to
ensure that the bank did not facilitate the financing of terrorism and
other criminal activities.

The UK bank did not wish to comment on the potential $1 billion fine
but said that it will testify before the Senate permanent subcommittee
on investigations on 17 July.

"We will be discussing a number of compliance issues with members of
the subcommittee, including past AML practices and in particular HSBC's
remediation and resolution of compliance matters," the bank said in a
statement.

Widespread media reports have cited an internal memo to staff ahead
of the bank’s scheduled appearance in which Stuart ­Gulliver, chief
executive, wrote: “Between 2004 and 2010, our anti-money laundering
controls should have been stronger and more effective, and we failed to
spot and deal with unacceptable behaviour.”

US prosecutors may take criminal or civil enforcement measures
involving the bank amid an investigation into terrorist funding, HSBC
said in February this year.

"The board and leadership of HSBC are fully committed to implementing
the highest standards and have already made significant changes to our
organisation’s structure to bring this about," the bank said.

HSBC is the second UK bank to be in the headlines for the wrong reasons in recent weeks, after Barclays
was fined £290 million (around $448 million) by US and UK regulators
for LIBOR rigging at the end of June. US politicians are now considering
calling on Bob Diamond, the former Barclays chief executive who stepped
down after the scandal broke out, to testify, according to media
reports.

Regulators have continued to punish banks for offences relating to
anti-money laundering. For example, in the UK, the Financial Services
Authority, fined Switzerland's Habib Bank £525,000 and one of its former
employees £17,500 for anti-money laundering system control failings.
The regulator said in a statement that the shortcomings at the Swiss
bank lasted almost three years and exposed the firm to unacceptable
risk. Back in March, Coutts was fined £8.75 million for failing to take
reasonable care to establish and maintain effective anti-money
laundering systems and controls relating to high-risk customers,
including “politically exposed persons.”