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The US Department of Justice has given HSBC a major boost by seeking dismissal of the deferred criminal charges that have been hanging over the bank since it was fined for money laundering and sanctions breaches five years ago.

The move by the DoJ lifts the threat of criminal prosecution that had been a “sword of Damocles” hanging over London-headquartered HSBC, as its new management team looks to put its misconduct-plagued past behind it.

HSBC said the DoJ would file a motion with the US District Court for the Eastern District of New York seeking the dismissal of the charges deferred by the agreement it reached as part of a settlement with the bank in December 2012.

The deferred prosecution agreement meant the DoJ could have reopened the criminal case against HSBC if the bank had been caught breaching the rules again during that period.

The expiry of the DPA is a vindication for Stuart Gulliver, who is due to hand over his role as chief executive to his retail banking and wealth management head John Flint after the bank’s full-year results in February.

Mr Gulliver said: “HSBC is able to combat financial crime much more effectively today as the result of the significant reforms we have implemented over the last five years.”

The move also provides an early success for Mark Tucker, who took over as non-executive chairman of HSBC in October having been chief executive of Asian insurer AIA for almost a decade.

HSBC signed the DPA in 2012 to avoid criminal charges for allegedly laundering at least $881m for Mexican drug barons and handling transactions for countries under US sanctions, such as Iran, Libya and Sudan.

However, HSBC warned in its last annual report that the independent monitor appointed by the DoJ to assess its anti-money laundering and sanction compliance programme had “expressed significant concerns” about the pace of HSBC’s attempts to clean up its act in its latest report.

HSBC said the monitor would continue as the bank’s skilled person under a 2012 direction issued by the UK Financial Conduct Authority.

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