Know-your-customer laws do just that. Go to a bank with $20000 in cash and no ID, and try to open an anonymous account with it. Take that $20k to a car dealership, and try to buy a car off the lot with it. As you walk away, cops stop you and take your cash via forfeiture. The prevailing assumption seems to be that anyone carrying that much cash is a criminal. The assumption should be that cash is cash, is cash, is cash. The whole point of having it is to dispense with ledgers and accounting books in everyday commerce. They burned the tally sticks and stocks to make us use paper money, and now they want the account history back.

Money with a history is not uniform and fungible.

If you make a dollar that came from a criminal worth less than a dollar that came from a saint, you are attacking one of the foundation concepts of money.

For the sake of argument, let's say I get $1 from my crime boss for intimidating a witness. I put it in my pocket. Then I find $1 lying on the street. I put that in my pocket. Then I help an old lady put groceries in her car, and she tips me $1. I also put that in my pocket. Then I go to the convenience store and buy a pack of gum. I reach into my pocket and pull out $1. What is the source of that money?

My pocket. Most people simply don't care where that dollar came from before that. Most people have no conceivable means of knowing where it came from before that. And if they knew, they wouldn't have the recordkeeping capacity to distinguish which dollar came from which activity. They only really care that I pay for the gum instead of shoplifting or strong-arming the clerk.

But ever since the invention of forensic accounting as a crime-fighting/investigative-reporting tool, it would seem that following the money often remains a valid tactic even when other methods of investigation fail. This is because financial businesses must keep meticulous records, as a consequence of being such juicy targets for fraudsters. So all the cop has to do is pop down to the bank records office with a warrant.

So as a society, we have a choice between having money that is more suitable for open trade, and money that is more suitable for combating crimes. My personal preference is for the former. Those who would like for money laundering to be a crime in and of itself--rather than an inchoate offense dependent on other crimes--prefer the latter.

The root question is whether you believe that criminals should be allowed to participate in white-market commerce, like normal people. I do. With that opinion, their blood lucre spends the same there as all the more righteous bills. They might be discouraged from committing crimes if they are less able to profit from them, but I don't think that's the case. If you make the cost of whitewashing black market money 25% of its face value, the criminal just does more crime, or charges more for their black market stuff. It's just another cost of doing [black market] business.

If you're trying to make crime unprofitable, you really need to seize assets and revenue streams only after a conviction, and in proportion to the magnitude of the crime. Civil forfeitures with inanimate defendants and prosecuting inchoate offenses in the absence of primary offenses is just slapping justice across her blindfolded face.

I think you are still confused about what constitutes money laundering. Accepting money from a criminal in exchange for goods or services is not money laundering, yet your whole post is about that.

Like, let's take the complication of know your customer out for a second. Of course you should not be prosecuted because a bank robber comes to your store and uses the money he stole to buy something. But if you are keeping fraudulent books in a cash-heavy business to conceal the source of tens of thousands of dollars you or your associates made through criminal activity, why shouldn't it be a crime?