HSBC avoided criminal prosecution for anti-money-laundering violations because of the bank’s “systemic importance” to the global financial system, according to a report from the House Financial Services Committee on Monday.

The report said top Justice Department officials, led by then-Attorney General Eric Holder, ignored an internal recommendation to criminally prosecute HSBC four years ago because they worried that criminal penalties might send shock waves throughout the global financial system.

In December 2012, HSBC HSBC, -2.03% HSBA, -5.16% was penalized $1.26 billion and paid $665 million in civil penalties — $500 million to the Office of the Comptroller of the Currency and $165 million to the Federal Reserve—as part of a deferred prosecution agreement with the Justice Department, for allegedly failing to identify money laundering transactions related to Mexican drug trafficking. The bank also was accused of failing to flag transactions with Iran and other countries subject to U.S. economic sanctions.

According to the House report, from the mid-1990s through September 2006, HSBC Group allowed approximately $660 million in transactions prohibited by the Treasury’s Office of Foreign Assets Control, or OFAC, involving countries such as Iran, Cuba, Sudan, Libya and Myanmar (also known as Burma). HSBC Group agreed with those clients to omit their names from U.S. dollar payment messages sent to HSBC Bank USA and other U.S. financial institutions. Despite paying a record fine for the violations, neither HSBC nor any of its executives or employees were ever criminally prosecuted for the violations.

A spokesman for HSBC Group declined to comment on the report nor would a spokeswoman for the House Financial Services Committee.

Holder testified in March 2013 that the size of the largest global banks, having grown even bigger since the financial crisis, was an “inhibiting influence” on prosecution. “I am concerned,” testified Holder, “that the size of some of these [financial] institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”

After being criticized for his “too big to jail” comments in March, Holder tried to take them back at a May 15, 2013, House Judiciary Committee hearing. He told Congress that the Justice Department wasn't only willing to prosecute any bank regardless of size, but also that HSBC’s size wasn't the decisive factor in its decision to decline to prosecute the institution for its violations.

The “Justice Department hasn't been forthright with Congress or the American people concerning its decision to decline to prosecute HSBC,” said the House financial committee in a news release, accompanying Monday’s report.

Based on the documents provided to the committee by Treasury, the Justice Department appears to have made the decision to defer prosecution of HSBC based on its size and its belief that prosecuting the bank could negatively impact the global economy. The Justice Department and the Treasury defied the committee’s requests for documents, resulting in subpoenas to both agencies. Only Treasury complied with the subpoenas, the House committee said.

Those Treasury documents raise serious concerns, says the report, about the Justice Department’s 2012 deal with HSBC. David Cohen, then-Treasury undersecretary for terrorism and financial intelligence, testified that the Justice Department had asked Treasury about the financial impact of an HSBC prosecution.

A spokesman for the Justice Department provided a lengthy statement which has been excerpted: “The Department of Justice is committed to aggressively investigating allegations of wrongdoing at financial institutions, and, along with our law enforcement partners, holding individuals and corporations responsible for their conduct. Because almost every conviction of a corporation will have some impact on innocent third parties, the mere existence of such an effect doesn't preclude prosecution. Rather, prosecutors must evaluate the significance of potential collateral consequences on a case-by-case basis.

The department’s investigation and resolution of its claims against HSBC was consistent with these practices and principles. As the U.S. District Judge who approved the deferred prosecution found: ‘Considered together, the DPA imposes upon HSBC significant, and in some respect extraordinary, measures. Indeed, taking into account the fact that a company cannot be imprisoned, it appears to me that much of what might have been accomplished by a criminal conviction has been agreed to in the [deferred prosecution agreement].’”

A Treasury spokesman declined to comment.

In addition to the Justice Department’s reported concern that prosecuting the bank would impact the safety and soundness of the global financial system, Holder’s office also sent proposed settlement numbers to HSBC before consulting with OFAC. That team would have confirmed that the settlement amount fully and accurately reflected all of HSBC’s violations.

Although Holder reportedly demanded that HSBC agree to his “take-it-or-leave-it” deferred-prosecution-agreement deal, the House report says “HSBC appears to have successfully negotiated with [the Justice Department] for significant alterations to the deferred prosecution agreement’s terms in the weeks following the Attorney General’s deadline.”

According to a report in the New York Times, the judge in the case was initially reluctant to sign off on the deferred prosecution agreement, “questioning whether it reflected the seriousness of the violations.” He approved the settlement in July 2013, subject to the condition that the Justice Department and HSBC, via a monitor, Michael Cherkasky, provide quarterly reports on the progress of the bank in implementing reforms that would insure it wouldn't violate the law again.

Cherkasky filed a detailed report with prosecutors on HSBC’s compliance in 2015 that was submitted to the court under seal, but later reports indicated that the bank had been resistant to change.