Digital Forensics has now come to occupy a central role in investigations, irrespective of the nature of crime. From murder to theft to smuggling to duty evasion to money laundering, there is a strong likelihood of there being some kind of digital trail present in every crime. Conviction in the court of law is the ultimate objective of every investigator and such evidences are crucial for building a watertight case. While law enforcement agencies the world over have started waking up to the critical role of digital forensics in investigations, the world of crime has moved ahead significantly. Before investigators could settle down with standard templates for how digital forensics could be used in investigations, the proliferation of cryptocurrencies (officially referred to as “virtual assets”, which is the official term used by the Financial Action Task Force) in money laundering has thrown up a new set of challenges. This paper attempts to take a holistic look at how virtual assets have begun to be used in money laundering, the extent of their proliferation, what solutions digital forensics currently has, for aiding anti money-laundering (AML) investigations, specifically money laundering involving usage of virtual assets. Thereafter, this paper examines what challenges law enforcement agencies face with the current tools and finally, how law enforcement agencies can reorient themselves to tackle the ever-evolving scenarios involving usage of virtual assets in money laundering.