U.K. regulator to probe HSBC By Dasha Afanasieva JERSEY (Reuters) - Jersey's financial watchdog is to probe anti-money laundering systems and controls at HSBC, following a report that Europe's biggest bank was harboring money for convicted criminals. Britain's Daily Telegraph newspaper said on Friday it had been handed leaked data that identified 4,388 British-based people holding 699 million pounds ($1.1 billion) in current accounts, including celebrities and bankers. Jersey's Financial Services Commission said on Tuesday it was to investigate "the matters raised by the press, including how the misappropriation of data occurred." While HSBC has refused to confirm the authenticity of the leaked client data for confidentiality reasons, the report has left Jersey's financial services sector - a critical component of the island's economy - facing a severe image crisis. London-listed HSBC, conducting its own investigation into the circumstances surrounding the alleged leak, has agreed to co-operate, the Commission said. Antonio Simoes, appointed deputy chief executive of HSBC Bank Plc and head of its British bank in November, was in Jersey on Sunday and Monday to meet the regulator and kickstart the banks' own probe. "We are pleased that the JFSC will look into how the misappropriation of data occurred, and apologize again to our customers for this," Simoes said in a statement on Tuesday. Last week, HSBC said probes by the United States into anti-money laundering failures in its international operations could result in a fine of more than $1.5 billion. The regulator and Jersey residents told Reuters they were frustrated about insinuations in the press before the facts of the case were clear. We get bashed all the time. It is aggravating because a lot of time and effort goes into regulating," Barry Faudemer, director of enforcement at the Jersey Financial Services Commission, told Reuters. Geoff Cook, chief executive of lobby group Jersey Financial, said he was more concerned about the implications for loss of privacy enjoyed by account holders rather than the allegations of money-laundering failures. "The breach of data was unhelpful for Jersey, but not damaging because this is not a systemic issue," he said. The commission has set up an anonymous whistleblowing telephone line to help collect information that will identify regulatory misconduct. Jersey politician Geoff Southern said: "It is absolutely vital for the reputation of the island that they do a thorough investigation and that the results are made public in the widest sense. It is no good saying that you have got the best regulation in the world if you cannot show it. Writing by Sinead Cruise and Chris Vellacott; Editing by Dan Lalor