It's a rough time to be a bank executive—but even worse when the bank you work for is associated with money laundering by Mexican drug cartels and has ties to banks that may help fund terrorist groups, including Al Qaeda.

The bank in question this time is Britain's HBSC. And at least one of the its executives has decided to high-tail it out of there. No, not Stuart Levey, who was named chief legal officer in January. During a Homeland Security and Governmental Affairs subcommittee hearing yesterday centered on the investigation report, Chief Compliance Officer David Bagley announced he would be stepping down from his post, but not before admitting that the bank had allowed the illegal activity to continue.

“Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators,” Bagley told the subcommittee. Bagley said he will stay until a successor is transitioned into the position.

The bank came under fire earlier this month when an investigation uncovered lax controls within HSBC that allowed Mexican drug cartels to launder billions of dollars through its U.S. operation. The investigation uncovered other illicit transactions, as well, and found that U.S. regulators were aware that HSBC had in place poor systems to detect problems and did nothing about it. The bank faces fines in excess of $1 billion from the Department of Justice.

In the hearing, Sen. Carl Levin (D.-Mich.), who chairs the subcommittee that conducted the investigation, said the problems found at HSBC show how large international banks can use their U.S. operations and links to foreign affiliates to attract business, and then hide suspicious or illegal activity amid legitimate U.S. dollar flows. “The end result is that the U.S. affiliate can become a sinkhole of risk for an entire network of bank affiliates and their clients around the world playing fast and loose with U.S. banking rules,” Levin said.

This latest financial institution transgression only underscores ongoing problems that have recently plagued the banking industry. Most recently, Barclays Bank PLC found themselves in the hot seat over manipulating benchmark interest rates, LIBOR and EUROBOR.

Read more about Bagley's resignation on The Wall Street Journal.