HSBC said on Monday that it had set aside $2 billion in order to deal with penalties, as profits dropped nearly 9 percent, according to The New York Times.
The bank said $700 million was set aside to cover fines, settlements and other expenses related to the money laundering scandal in the United States, whereas an additional $1.3 billion provision was made for a settlement compensating costumers in the United Kingdom for mis-sold insurance.
Net profit for the company was down 8.4 percent at $8.4 billion, compared to $9.2 billion the previous year, according to the Associated Press.
The AP reported that the $700 million provision includes possible penalties for violating the US Bank Secrecy Act in a case from two years ago, as well as penalties from continuing investigations into violations of economic sanctions against Iran and other countries.
More on GlobalPost: HSBC Mexico pays $27.5M fine over money laundering
HSBC's Chief Executive Stuart Gulliver said the cost of the money laundering scandal could be "significantly higher" for Europe's largest bank. He said, "What happened in Mexico and the U.S. is shameful, it's embarrassing, it's very painful for all of us in the firm," according to Reuters.
Gulliver added, "We need to execute on the compliance changes and then prove ourselves worthy and rebuild this over a number of years. There are no quick and easy fixes."
More on GlobalPost: HSBC 'allowed drug money laundering', says US Senate
The bank's chairman, Douglas Flint, said, "The banking industry is operating in a hostile climate so we must double our efforts to convince our regulators, customers and investors that we are striving for the highest possible standards. Only that way can we allay public fears and regain trust in our industry," according to the AP.
A US Senate report last month found that the bank had allowed affiliates in countries like Mexico, Saudi Arabia and Bangladesh to move billions in suspected funds without adequate controls, benefiting Iran, terrorists and drug dealers, according to Agence France Presse.
HSBC paid Mexico a $27.5 million fine for the money laundering scandal earlier this month.