UK lender HSBC is set to pay US authorities a $1.9bn penalty over money laundering accusations.

A US Senate-led investigation concluded that HSBC has become the go-to bank for drug traffickers and rogue nations, due to its lack of compliance practices.

The bank has issued a statement accepting responsibility for its mistakes, with HSBC group chief executive officer Stuart Gulliver stating: “We are profoundly sorry for them”.

According to the investigation, HSBC carried out 28,000 undisclosed sensitive transactions between 2001 and 2007, with $19.7bn of these involving Iran. The bank has been accused of removing references to Iran in the transactions.

In Saudi Arabia, HSBC worked with the country’s biggest bank Al-Rajhi Bank. The Senate report states that after the 11 September 2001 terrorist attacks on the US, there was evidence that Al-Rajhi had links with groups financing terrorist activities, but inspite of this, HSBC Middle East was one of a number of banks that continued to work with the Saudi institution. HSBC did close its Al-Rajhi accounts, but started working with the Saudi lender again in 2006.

The US report also includes allegations of HSBC allowing money laundering through its Mexican operations, and also criticises the bank’s activities in Libya, Sudan, Myanmar and Cuba.