Global banking giant HSBC has been found to have exposed the US financial system and some other countries - possibly including India - to terrorist financing and drug trafficking because of poor anti-money laundering controls.
The British bank through its Hong Kong affiliate allowed a tainted Saudi bank to withdraw money in Indian rupees, among other currencies, though the reason for it was not specified.
The Al Rajhi Bank is Saudi Arabia's largest private financial institution.
"After the 9/11 terrorist attack, evidence began to emerge that Al Rajhi Bank and some of its owners had links to financing organisations associated with terrorism," said a report of the senate's permanent subcommittee on investigations released on Monday.
Subcommittee chairman senator Carl Levin said HSBC used its US bank to provide "US dollar services to clients while playing fast and loose with US banking rules".
In a statement to British regulators, the bank said, "We will apologise, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong."
David Bagley, a top compliance executive at the bank since 2002, told the senate panel on Tuesday that he would step down.
Senate investigators focussed on HSBC's key US affiliate, HSBC Bank USA, known as HBUS. HSBC has 7,200 offices in more than 80 countries, including India.
There was no response to an email sent to Al Rajhi Bank till the filing of this report.
With agency inputs