HSBC pays record fine to duck probe

The investigation into the bank's transactions focused on the transfer of funds from Mexican drug cartels and on behalf of nations such as Iran and Cuba, which are under US sanctions.

The financial crisis has put put banks under greater scrutiny and a string of banking scandals has highlighted lax practices, as well as a culture of arrogance and disregard for the law.

Since 2009, Credit Suisse, Barclays, Lloyds and ING have all paid big settlements related to allegations that they moved money for people or companies that were on the US sanctions list.

And today HSBC joined them as did Standard Chartered, which was accused of scheming with the Iranian government to launder billions of dollars and settled their investigation with a $340 million (£211m) payout.

HSBC admitted that its money-laundering prevention measures were inadequate and claimed that it had since made strides in beefing up its controls. The bank also said it has reached agreements over investigations by other US government agencies and that it expects to sign an agreement with British regulators shortly.

But it still maintained that its behaviour was down to "mistakes" rather than simple lawlessness.

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," grovelled HSBC chief executive Stuart Gulliver.

The investigation by federal and state authorities will result in HSBC paying $1.25bn (£776m) in forfeiture and $655m (£407m) in civil penalties.

The $1.25bn is the largest-ever forfeiture in a case involving a bank.

Under what is known as a deferred prosecution agreement - essentially a probation deal - the bank will be accused of violating the Bank Secrecy Act and the Trading With the Enemy Act. HSBC will admit to misconduct in a New York court.

The agreement means that the bank won't be prosecuted further if it meets certain conditions, such as strengthening its internal controls to prevent money laundering.

HSBC had a net income of $16.8bn (£10.4bn) last year and operated in about 80 countries around the world.