The bank’s alleged failure to establish money laundering controls, involving transactions related to Mexican drug cartels, has led to a charge of $700m to cover the cost of US regulatory fines.
In the first six months of 2012, the bank’s underlying profits were pushed down by 3% due to the provisions compounded by $1.3bn of charges for miss-sold payment protection insurance and derivatives products in the UK.
HSBC chief executive Stuart Gulliver accepted that the bank failed to thwart money laundering in Mexico and the US and stated the wrong-doing as "shameful, embarrassing and very painful".
In early July, the US Senate published a derogatory report about the bank’s wrong-doing while an outside audit acknowledged that HSBC’s US unit handled around 25,000 transactions related to Iran involving more than $19bn.
