US lawmakers have accused the global bank HSBC of opening the doors of the financial system to terrorists, drug dealers and money launderers, ahead of a hard-hitting report.

A Senate committee has found the London-based lender had allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

“In an age of international terrorism, drug violence in our streets... and organised crime, stopping illicit money flows that support those atrocities is a national security imperative,” Senator Carl Levin had said yesterday.

“HSBC used its US bank as a gateway into the US financial system for some HSBC affiliates around the world to provide US dollar services to clients while playing fast and loose with US banking rules,” his statement said.

“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,” he warned.

HSBC’s US affiliate had no immediate reaction to advance copies of the report, but the bank’s parent firm HSBC Holdings said last week that it would apologise to lawmakers at a Senate hearing today into the findings.

According to the US Senate’s Permanent Subcommittee on Investigations, the firm’s US unit HBUS allowed partner HSBC banks in countries with weak fraud and laundering controls to move billions of dollars through its books.

“The Mexican affiliate transported $7 billion in physical US dollars to HBUS from 2007 to 2008... raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States,” the report says.

“HBUS provided US dollars and banking services to some banks in Saudi Arabia and Bangladesh despite links to terrorist financing,” it says.

“In less than four years, HSBC cleared $290 million in obviously suspicious US travellers checks for a Japanese bank, benefiting Russians who claimed to be in the used car business,” it adds, according to a news release.

In a statement released ahead of today’s hearing, Senator Levin demanded that the US federal regulator, the Office of the Comptroller of the Currency, do more to keep an eye on HSBC and other banks and take action against abuses.

He also called on HSBC to deal its own “pervasively polluted” culture.

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