WASHINGTON — HSBC said today it will pay $1.9 billion to settle a U.S. money-laundering probe, avoiding a protracted legal battle that would have further embarrassed the British banking giant.

The probe of Europe’s largest bank by market value focused on the transfer of funds through the U.S. financial system from Mexican drug cartels and on behalf of nations such as Iran that are under international sanctions.

Regulators have put banks under greater scrutiny since the financial crisis and a string of banking scandals highlighted lax practices and a culture of arrogance and entitlement.

Money laundering by banks has become a priority target for U.S. law enforcement. Since 2009, Credit Suisse, Barclays, Lloyds, and ING have all paid big settlements related to allegations that they moved money for people or companies that were on the U.S. sanctions list.

HSBC said in a statement that its anti-money laundering measures were inadequate and it had since made strides in beefing up its controls. The bank also said it has reached agreements over investigations by other U.S. government agencies. It also expects to sign an agreement with British regulators shortly.

“We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again,” HSBC Chief Executive Stuart Gulliver said. A U.S. law enforcement official said the investigation will result in HSBC paying $1.25 billion in forfeiture and $655 million in civil penalties. The $1.25 billion figure is the largest forfeiture ever in a case involving a bank. Under the arrangement, HSBC will admit certain misconduct, an official said, but the details were not available.