A Senate report earlier this month said HSBC Holdings and its U.S. affiliate exposed the U.S. financial system to money laundering, drug trafficking and terrorist financing risks because of poor controls.
David Bagley, head of group compliance for HSBC Holdings PLC, told the committee, "While there have been successes on many compliance issues, I recognize that there have been some significant areas of failure ... despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations, and the expectations of our regulators.
"This is something that a bank seeking to conduct business in the United States, and globally, must acknowledge, learn from, and most importantly, take steps to avoid in future."
Asked about a subsidiary's client, Zhenli Ye Gon -- who was a reported drug lord caught selling precursor chemicals for methamphetamine production to La Familia and the Sinaloa Mexican cartels -- Paul Thurston, chief executive of HSBC retail banking and wealth management, told the panel: "I was horrified by the case. And this really exposed a whole series of weaknesses within the bank.
"So we -- I personally conducted an investigation," Thurston said. "I brought in the audit team. I brought in the security and fraud team. I brought in the compliance team and we made a number of changes."
A global company with thousands of offices across the globe, HSBC is headquartered in London.
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