While privacy coins merit the majority of money-laundering concern, regulators should instead focus their attention on the advanced exchanges that trade such currencies. A privacy coin’s audit trail may be anonymous, but a digital exchange’s ability to view its own trades and digital wallet balances is not. To legally transact (clear) the U.S. dollar globally, correspondent banks are required to maintain a New York branch and comply with U.S. AML regulations, even if they do not maintain a U.S. retail banking presence. This illustrates the challenge governments face when attempting to regulate advanced exchanges. Since advanced exchanges do not accept government-issued fiat tender, governments may face difficulty enforcing their regulatory standards globally.

https://www.reuters.com/article/bc-finreg-aml-cryptocurrency/crypto-cleansing-strategies-to-fight-digital-currency-money-laundering-and-sanctions-evasion-idUSKCN1FX29I