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1660s, "to wash linen," from noun launder "one who washes" (especially linen), mid-15c., a contraction of lavender, from Old French lavandier "washer, launderer," from Medieval Latin lavandaria "a washer," ultimately from Latin lavare "to wash" (see lave). Criminal banking sense first recorded 1961, from notion of making dirty money seem clean; brought to widespread use during U.S. Watergate scandal, 1973. Related: Laundered; laundering.
To transfer or convert funds so that illegal or dubious receipts are made to appear legitimate: The account money that had been ''laundered'' by being siphoned from this country into Mexico and returned under an alias (1961+)