Token Laundering

Definition ∞ Token laundering refers to the illicit process of disguising the origins of illegally obtained cryptocurrency or digital tokens to make them appear legitimate. This typically involves a series of complex transactions across various platforms, mixing services, or decentralized exchanges to obscure the audit trail. Token laundering is a significant concern for regulators and law enforcement, as it facilitates financial crime within the digital asset ecosystem. It poses a substantial challenge to maintaining financial integrity.
Context ∞ Combating token laundering is a top priority for global financial regulators and anti-money laundering (AML) authorities, leading to increased scrutiny of cryptocurrency exchanges and decentralized finance platforms. The development of advanced analytical tools and international cooperation are essential in tracking and disrupting these illicit activities. Stricter compliance measures and know-your-customer (KYC) protocols are being implemented to deter and detect token laundering operations.