HSBC's chief executive Stuart Gulliver has apologised to the US Senate after the bank was found to have allowed drug money to be laundered through its accounts.
The group's head of compliance, David Bagley, also resigned from his post in front of the committee after evidence came to light of serious lapses by the bank.
A report by the US Senate Permanent Subcommittee on Investigations, a Congressional watchdog panel, detailed how HSBC's subsidiaries transported billions of dollars of cash in armoured vehicles, cleared suspicious travellers' cheques worth billions, and allowed Mexican drug lords to buy planes with money laundered through Cayman Islands accounts, the Guardian reports.
Apologising for the bank's conduct, Gulliver (pictured) said: "We have sometimes failed to meet the standards regulators and customers expectÖ we take responsibility for fixing what went wrong."
In a blistering attack on the bank, Senator Carl Levin said: "The culture at HSBC was pervasively polluted for a long time" as it allowed funds to move to and from its branches in the US as far afield as Mexico, Syria, the Cayman Islands, Iran and Saudi Arabia.
HSBC also provided US dollars and banking services to banks in Saudi Arabia and Bangladesh despite apparent links to terrorist financing, according to the report, and categorised Mexico as a "low risk" country.
"If an international bank won't police its own affiliates to stop illicit money, the regulatory agencies should consider whether to revoke the charter of the US bank being used to aid and abet that illicit money," Levin added.
HSBC faces a fine of as much as $1bn (£640m) following the revelations, according to some analysts.
The bank's shares closed 1.11% higher at 553.5p in London yesterday.