Photo: The Canadian Press. All rights reserved.

FILE -- In a July 30, 2012 file photo people walk past a logo of HSBC headquarters in Hong Kong . HSBC, the British banking giant, will pay $1.9 billion to settle a money-laundering probe by federal and state authorities in the United States, a law enforcement official said Monday Dec. 10, 2012. (AP Photo/Vincent Yu, file)

HSBC, the British banking giant, said Tuesday it will pay $1.9 billion to settle a money-laundering probe by federal and state authorities in the United States.

The probe of the bank, Europe's largest by market value, has focused on the transfer of funds through the U.S. financial system from Mexican drug cartels and on behalf of nations like Iran that are under international sanctions.

Stuart Gulliver, Group Chief Executive of HSBC, released a statement Tuesday saying: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

The bank also said it has reached agreements over investigations by other U.S. government agencies. It also expects to sign an agreement with British regulators shortly.

A U.S. law enforcement official said Monday that the investigation by federal and state authorities will result in HSBC paying $1.25 billion in forfeiture and paying $655 million in civil penalties. The $1.25 billion figure is the largest forfeiture ever in a case involving a bank. Under what is known as a deferred prosecution agreement, the financial institution will be accused of violating the Bank Secrecy Act and the Trading With the Enemy Act.

Under the arrangement, HSBC will admit to certain misconduct, the official said, but the details of those admissions to be made in a New York court were not immediately available early Tuesday. The official spoke on condition of anonymity because the source was not authorized to speak about the matter on the record.

Nevertheless, the agreement means the bank won't be prosecuted further if it meets certain conditions, such as strengthening its internal controls to prevent money laundering. The Justice Department has used such arrangements often in cases involving large corporations, notably in settlements of foreign bribery charges.

The London-based bank said it is co-operating with investigations but said those discussions are confidential.

In regard to HSBC and Mexico, a U.S. Senate investigative committee reported that in 2007 and 2008 HSBC Mexico sent about $7 billion in cash to the United States. The committee report said that large an amount of cash indicated illegal drug proceeds.