HSBC's controversial 1.9 billion-dollar settlement deal with American authorities over money laundering charges, has been stalled after a row between the Department of Justice and the judge overseeing the case.
The deal - known as a deferred prosecution agreement (DPA) - would have exempted HSBC from prosecution and triggered a storm of criticism, reports the Guardian.
Judge John Gleeson is now believed to be considering rejecting the deal, a move that could leave HSBC facing criminal prosecution and the threat that its charter to do business in the U.S. could be revoked.
The bank will hold its annual meeting in London on Friday.
U.S. authorities reached an agreement with HSBC last December after uncovering evidence that the bank had illegally conducted transactions on behalf of Mexican drug lords, terrorists and customers in Cuba, Iran, Libya, Sudan and Burma - all countries that were subject to US sanctions.
Gleeson, a former assistant attorney general, made his name prosecuting drug rings and organised crime, most notably securing the conviction of John Gotti, the Gambino crime family boss.
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The justice department is believed to be challenging the need for Gleeson's approval after failing to get a quick signature while the judge is upholding his opinion that he must sign off on the DPA.
John Coffee, Adolf A Berle professor of law at Columbia University, said judges were increasingly unhappy with DPAs.
Senator Chuck Grassley lambasted the justice department over the settlement last year and said it was "inexcusable" that they had not brought a criminal prosecution against the bank.
HSBC has undergone a drastic management overhaul since the issues came to light and has strengthened its compliance policies and procedures. It is continuing to implement those changes as the US authorities work on a resolution to the DPA disagreement.
