Panama's banking regulator said on Wednesday it had seized the local unit of Banca Privada D'Andorra (BPA), as the lender's Andorra-based headquarters is being investigated by the United States government for possible money laundering.

The action was taken to protect depositors, Panama's banking superintendent SBP said in statement.

On Tuesday, the U.S Department of the Treasury named BPA as an institution of primary money laundering concern, alleging the bank processed proceeds of organized criminals in Russia and China, $2 billion in laundered funds from Venezuelan state oil company PDVSA [PDVSA.UL], and other criminal activity.

Andorra's financial authorities said on Wednesday that the money laundering probe at BPA had no implications for the rest of its banking sector, as the lender's Spanish unit also distanced itself from the case.

Andorra is a small principality and tax haven in the Pyrenees mountains between Spain and France.