Argentina's central bank on Tuesday ordered HSBC Argentina to name a new president and vice president within 24 hours, accusing the bank of failing to establish necessary controls to prevent tax evasion and money laundering.
Argentine authorities locked horns with HSBC in November when they charged the bank with helping more than 4,000 clients evade taxes by stashing their money in secret Swiss bank accounts.
HSBC rejected the charge, but Argentina said in March it wanted HSBC to repatriate $3.5 billion that Argentine tax authorities said the bank had moved offshore.
The central bank said on Tuesday that HSBC's president, Gabriel Martino, "had not directed the necessary measures to mitigate and adequately address the prevention of money laundering and the financing of terrorist activities."
Officials at HSBC were not immediately available to comment. HSBC has consistently said it respected Argentine law.
Ricardo Echegaray, head of Argentina's AFIP tax agency, called the central bank's move "positive". He said the bank's clients who had moved money abroad through secret channels should accept criminal liability and pay the taxes owed.
"They will have to recognize that together with Martino, and the HSBC authorities here in Argentina, they looked to cheat Argentina, to move funds abroad that they had never declared and on which they had never paid taxes," Echegaray told a news conference.
Argentina's central bank has the authority to revoke the licenses of officials who legally represent commercial banks before the financial regulator.
Europe's largest bank faces probes in several countries of allegations it helped clients dodge taxes.