10 December 2012 Last updated at 19:30 ET
HSBC is to pay US authorities $ 1.9bn (£1.2bn) in a settlement over money-laundering, say reports, the largest ever in such a case.
The UK-based bank was alleged to have helped launder money belonging to drug cartels and states under US sanctions.
Earlier this year HSBC admitted having poor money laundering controls following a US Senate investigation.
Last month announced it had set aside $ 1.5bn to cover the costs of any settlement or fines.
The deal could be announced as early as Tuesday, the Wall Street Journal reports.
It follows the announcement of a similar but much smaller settlement with UK-based Standard Chartered bank, which will pay $ 300m in fines for violating US sanction rules.
The cases are seen as part of a crackdown on money laundering and sanctions violations being led by federal government agencies and New York state authorities.
The $ 1.9bn sum in the HSBC settlement is expected to include around $ 1.25bn forfeited by HSBC – the largest amount ever paid out in such a case – and a $ 650m civil fine.
The bank will also admit charges of violating bank secrecy laws and the Trading With the Enemy Act, reports suggest.
Senate criticism
The settlement had been widely expected following a report by the US Senate, published earlier this year, that was heavily critical of HSBC’s money laundering controls.
The report suggested HSBC accounts in Mexico and the US were being used by drug barons to launder money.
It cited examples including the transfer of $ 7bn between HSBC’s Mexican and US subsidiaries between 2007 and 2008, made despite Mexico’s reputation as a centre of drug smuggling.
It also said HSBC regularly circumvented restrictions on dealings with Iran, North Korea, and other states under US sanctions.
HSBC admitted its money laundering controls were not strong enough following the Senate report.
On Tuesday the London-based multinational announced it had appointed a former US official to work as its head of financial crime compliance – a new position.
Bob Werner was previously the head of the US Treasury’s Office of Foreign Assets Control (OFAC) – the agency responsible for enforcing the US sanctions on countries including Iran.
He will be responsible for beefing up HSBC’s anti money laundering and sanctions compliance systems.
It is unclear what impact the case will have on HSBC’s business. The bank is the biggest in Europe by market capitalisation, and made pre-tax profits of $ 12.7bn for the first six months of 2012.
BBC News – Business
HSBC ‘to pay $1.9bn’ in US deal
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