Trade minister Lord Green has expressed "regret" that HSBC failed to prevent drug king pins, terror groups and rogue states using the bank to launder money at the time he was in charge.
"HSBC has expressed its regret that there were failures of implementation in these areas, and I share that regret," he said.
He added: "As you know, HSBC has also publicly committed to fixing what went wrong."
Last Tuesday HSBC apologised after a US Senate investigation accused it of, among other suspect activities, providing services to some lenders in Saudi Arabia and Bangladesh believed to have helped fund al Qaeda and other terrorist groups.
Senator Carl Levin, the chairman of the subcommittee investigating the bank, said the culture of HSBC's non-UK subsidiaries had been "pervasively polluted for a long time" and said senior executives in London "knew what was going on but allowed the deceptive conduct to continue".
On Tuesday Lord Green, who was chairman of the bank from 2006 until 2010, responded to demands by Labour that he answer questions about what he knew about the accusations made and when.
"I would add that I am proud to have worked for HSBC for 28 years, culminating in my time as chairman," he said,
"HSBC have always sought to do the right thing, and when things go wrong, worked hard to put them right."
However Labour's shadow Treasury minister Chris Leslie said that while it was right that Lord Green had expressed regret for the failures of HSBC, his response "totally fails to address the detailed questions about what he knew and when about these very serious issues".
"As a British Minister, an adviser to George Osborne on banking and a member of the Cabinet Committee on banking reform, he is accountable first and foremost to Parliament," he said.
"He cannot and should not hide behind ‘continuing discussions between HSBC and the US authorities’ as a reason for failing to answer questions.
"The House of Lords remains in session. He must now come to Parliament and explain what he knew, when he knew it and what action he took."
Last week the Labour Party twice requested that Lord green answer questions about the scandal - demands that were rebuffed.
Yesterday Lord Strathclyde, told the House of Lords that the government had "every confidence" in the job Lord Green was doing as trade minister - a post he was appointed to by David Cameron in 2010.
"Her Majesty's Government has every confidence in Lord Green's ability to fulfil his ministerial duties," he said. "His experience, expertise and enthusiasm provide great benefit to he UK's international profile."