HSBC’s failure to implement adequate money-laundering controls in Mexico is among lapses that US Senate investigators will criticize this week, according to Bloomberg, as the bank prepares to face a possible fine - according to media reports - of up to $1 billion.

The news service described how HSBC bought Grupo Financiero Bital in 2002, injecting $800 million into the Mexico City-based bank to meet capital standards. Money-laundering controls were largely absent in HSBC’s operations there in the ensuing years, the report said, citing unnamed sources.

Findings of the US Senate’s Permanent Subcommittee on Investigations have not yet been disclosed.

The allegations against HSBC come at a time when non-US banks, such as Switzerland’s UBS and its rivals, have also come under pressure for allegedly aiding wealthy US citizens to evade taxes. The US and Swiss authorities have been in discussions to reach a broad bilateral diplomatic agreement to resolve the matter.

Alleged failures

The compliance failures in Mexico, as well as unreported Iranian transactions and insufficient attention to US anti-money-laundering rules will be among allegations faced by the UK/Hong Kong-listed bank at tomorrow’s hearing, the news service said.

The hearing, entitled US Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History, will happen as a 400-page committee report is issued, the news service’s report said.

On July 10, HSBC’s chief executive, Stuart Gulliver, told staff in an internal memorandum that the firm should be held accountable for “fixing what went wrong”, adding: “We failed to spot and deal with unacceptable behavior.”

In another report, the Wall Street Journal says a settlement between HSBC and the US Justice Department to resolve a criminal probe into the laundering of drug-cartel and other money could be reached within weeks.