[ by Howard Haykin ] A Senate subcommittee will release on Tuesday a report detailing the global transactions conducted by HSBC Holdings Plc in some of the world's riskiest corners, including Mexico - also deemed top locations for money laundering and other improper financial dealings.  The Senate Permanent Subcommittee on Investigations, a top congressional financial watchdog, will hold a hearing examining the AML system of HSBC, Europe's biggest bank.  Several HSBC executives are expected to testify, including the bank's chief legal officer Stuart Levey, who joined the bank in January.  He previously was one of the top officials on terrorism and finance at the U.S. Treasury Department.  [C-I Note: There's little doubt, at least in our minds, that Mr. Levey was hired for just this reason - to be HSBC's public face at such Congressional and regulatory gatherings.] Meanwhile, the U.S. Justice Department ... has been conducting its own investigation, looking to see if HSBC was vulnerable to illicit funds moving through the bank.  People familiar with the situation say a potential settlement could exceed $1 billion.  That figure is also supported by an HSBC regulatory filing from earlier this year.  It that filing, HSBC said it expected a formal enforcement action that could be criminal in nature. Before HSBC became the latest global bank to become a target of U.S. law-enforcement investigations into money laundering, there was Wachovia Corp., which in 2010 agreed to pay $160 million to settle a Justice Department probe into Mexican transactions.  And just last month, ING Bank NV agreed to pay $619 million to settle U.S. government allegations that it violated U.S. sanctions against Cuba and Iran. In a memo this week ahead of the hearing, CEO... Stuart Gulliver said: "It is right that we will be held accountable and that we take responsibility for fixing what went wrong. As well as answering the subcommittee's questions, we will explain the significant changes we have already made to strengthen our compliance and risk management infrastructure and culture." In its regulatory filings, HSBC has said the transactions with Iranian parties are under investigation by the Justice Department, the Federal Reserve, and the district attorney in Manhattan.  Iran is also expected to be a focus of the Senate investigation.  The Senate probe also is expected to examine HSBC's dealings in Mexico, a country fraught with drug-traffickers who move money through the U.S. banking system.  A good portion of that money is transferred through Mexican forex houses, known as casa de cambio. According to documents reviewed by Reuters, U.S. law-enforcement agencies have examined Mexican money that moved from the exchange houses into the HSBC banking system.  The transactions were tied to laundered drug proceeds. For further details, go to:   [Reuters, 7/13/12].