HSBC chief Bagley resigns over dirty money scandal

Mr Bagley told a Senate investigations panel yesterday that he will remain at the London-based bank in a new role.

Mr Bagley has been the head of compliance at the bank since 2002.

Other HSBC executives also apologised at the hearing, but all claimed that they weren’t fully aware of illicit transactions flowing through the bank.

The executives said the bank has made deep changes to its policies and corporate culture to prevent further exposure to illegal transactions.

But senators expressed scepticism, noting that the problems had persisted for seven years.

The Senate permanent subcommittee on investigations also found that HSBC bank affiliates had skirted US government bans against transactions with Iran and other countries.

And HSBC US division provided money and banking services to banks in Saudi Arabia and Bangladesh believed to have helped fund al-Qaida.

The report also blamed US regulators, saying that they knew the bank had a poor system to detect problems but had failed to take action.

Thomas Curry, the head of the US Office of the Comptroller of the Currency that oversees HSBC US operations, also apologised at the hearing.

“HSBC has fallen short of our own expectations and the expectations of our regulators,” Mr Bagley testified.

The executive who headed the HSBC Mexican affiliate in 2007 and 2008 Paul Thurston claimed that he had tried to clean up deficiencies he found in the operation.

Mr Thurston said the Mexican bank had been a “fast-growth” bank that lacked controls against money laundering.

The CEO of the US division of HSBC also apologised for weak oversight.

“We’re burning the bridges to make sure no-one can get back to the way it was before,” said Irene Dorner, president and CEO of HSBC Bank USA, which has assets of roughly $210 billion (£134bn).

The US Justice Department said it is conducting a criminal investigation into HSBC operations.