I have some money that fell in a mud puddle. It got really dirty, and I don't want to put it in my wallet as it currently is. Is it legal to wash the money?
It is perfectly legal to physically wash US currency under US law.
The kind of "money laundering" that is illegal is obscuring the history of funds, making proceeds of crime appear legitimate, or just making the source of funds hard to trace. That violates 18 USC 1956 and/or 18 USC 1957 There may be other relevant laws as well.
This is "washing" money only in a metaphorical sense.
See also this US Dept of Justice page
As far as the law goes, there shouldn't be any problem with that. 18 USC 333 lists a bunch of stuff you can't do to currency, but the rule ends with the phrase "... with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued". Based on your description you have no intent to render the bill unusable or invalid, so you aren't violating that statute.
On the practical side, US banknotes are made of a blend of cotton and linen, so the underlying material should be washable. It isn't particularly thick, though, so hand washing would be less likely to result in tears than sending it through the washing machine. Experts quoted in a New York Times article mention that detergents can damage some of the security features on the bill and cause problems with bill sorting machines and automated money readers. They also remark that the only completely safe way to clean a bill without risk of damaging it is a process similar to dry cleaning, far too complicated for a DIY solution.
Your safest bet is just to swap it out. The Bureau of Engraving and Printing runs a Mutilated Currency Redemption program that will swap out heavily soiled or damaged bills for fresh ones. I usually take my extremely dirty or damaged bills to my bank and they'll swap them out for me. They send currency to the BEP for replacement in bulk, so it's the same ultimate effect but with less hassle. Just don't try to put heavily soiled bills in an ATM or any other mechanical bill reader as they can damage or jam the mechanism.
It is not illegal unless you are damaging the money. 18 USC 333 states that it is forbidden to damage money " intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued".
You should clean your banknotes with care. [source]: Do not use hot water. Do not use detergent or harsh soap. If you use any cleaning agent, thorougly dillute it. Most dirt will get off with water alone. But the best solution is to take the dirty bankonte to a bank. they'll swap it for a new one.
If you are using a washing machine, use cold water, very little cleaning agents, and put the money in a delicate laundry bag. [source]
This money collector and auction site has a procedure to clean money without damaging it.
How to Clean Paper Money
- Place your old paper money on the clean plastic surface
- Pour the water in the container
- Add a small amount of dish washing soap
- Dip the sponge in the soapy water
- Very softly wipe the note laterally, from the middle to the edges
- Be sure not to scrub or aggressively wipe the note to avoid tear and damages
- Make sure you lightly wipe both ends of the notes
- Turn the note over and repeat the same cleaning process
- To dry, air drying is the best option. It’s not recommended to fan dry as the note can blow away. If the note is creased after drying you can try and flatten it by using a heavy book on top.