The US Financial Crimes Enforcement Network's wounding money-laundering inquiry into Banco Privada de Andorra, the Andorran private bank, has led to the bankruptcy of one of its Spanish wealth management subsidiaries.

Banco Madrid is a private banking institution specialising in the management of collective investment institutions (investment funds and SICAVs), discretionary portfolio management and vehicles of domesticand international investment, has applied for bankruptcy in the wake of the arrest last weekend of Joan Pau Miquel Prats, its parent bank's CEO, on suspicion of money-laundering in Andorra. It had about 14,000 high-net-worth clients. FinCEN's report did not accuse it of being embroiled in its parent company's AML transgressions.

Banco Madrid's website still says: "Our goal is excellence in management, capital preservation and rigorous risk control. Our clients value security and share the importance of working with an entity of the maximum strength."

A meeting of creditors has been called after a run on the bank. FinCEN has designated its parent as a "primary money-laundering concern", which could lead to it being cut off from the US financial system.