British bank HSBC is to apologise to politicians in the United States for its failure to properly implement money-laundering controls meant to prevent terrorists and other criminals from using its services.
The disclosure was made in an internal memo sent out by HSBC's chief executive Stuart Gulliver and comes in advance of what is expected to be a substantial fine for the bank.
"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," Gulliver told staff.
HSBC executives are due to appear before a Senate permanent subcommittee on investigations on 17 July as US officials investigate the ties between money laundering and the financing of terrorism.
In the memo, first reported by Bloomberg News, Gulliver said the hearing would "reveal that in the past we fell well short of the standards that our regulators, customers and investors expect". He said: "It is right that we be held accountable and that we take responsibility for fixing what went wrong."
A 2010 investigation by the Federal Reserve and the Office of the Comptroller of the Currency found "a significant potential for unreported money laundering or terrorist financing" at the bank. HSBC announced earlier this year that it faced a significant fine over the monitoring of money laundering.
Gulliver told staff that the bank has since doubled the amount it spends on compliance, from $200m (£129m) in 2010 to $400m. The Senate investigative panel has yet to release details of who will be testifying.
But Irene Dorner, chief executive of HSBC's North American business, is expected to outline HSBC's overhaul of its internal controls at the hearing.
The changes have come too late to halt what could amount to a record fine for Europe's biggest bank.
Last month ING, the Dutch bank, paid $619m to settle accusations it helped Iranian and Cuban companies move billions of dollars through the US financial system in violation of US sanctions. Some analysts have suggested HSBC's fine could be far higher.
The hearing and fine will be another black mark for the UK financial services community. US regulators including the justice department are currently investigating the Libor rate-fixing scandal, centred on London.
Last month, US politicians hit out at UK regulation during an investigation into JP Morgan's multi-billion-dollar trading losses at its London offices.
"It seems to be that every big trading disaster happens in London," Representative Carolyn Maloney told the House Financial Services Committee as it investigated JP Morgan's losses.
William Black, professor of economics and law at University of Missouri Kansas City, said: "There is a theme developing in Washington that the City of London is evil, that it has a corrupt culture."
He said that while the view might not be fair, the JP Morgan scandal, Libor and now HSBC meant it was a theme that was likely to be developed. "We like to blame someone else," he said.
In a statement, HSBC said: "HSBC confirms that it will testify before the Senate Permanent Subcommittee on Investigations on July 17. As disclosed in regulatory filings, HSBC has been fully co-operating with the PSI and regulatory authorities in the United States in relation to these issues."