Virtual currency is a type of digital or electronic currency that exists only in digital form and is not issued or regulated by any central authority, like a government or bank. Examples include cryptocurrencies like Bitcoin and Ethereum. Virtual currencies can be used for online transactions, investments, and peer-to-peer transfers, often operating independently of traditional financial systems. 

In the context of Anti-Money Laundering (AML) and financial crime compliance, virtual currencies present both opportunities and risks. While they offer fast, decentralised transactions, they can also be exploited for illicit activities such as money laundering, fraud, and terrorism financing due to their anonymity and global reach. Financial institutions and regulators are developing new strategies, such as transaction monitoring and customer due diligence, to track virtual currency transactions and ensure compliance with AML laws. This helps protect the financial system from being used for illegal purposes.