That's why you use mixers. Good mixers will completely break the chain between inputs and outputs.
Why are mixers legal? The only purpose I find on them is to money launder. They are literally useless if you don't have anything to hide.
Why are privacy coins like Monero legal? They are even more suitable for money laundering than Bitcoin. Privacy is on of the basis human rights.
As long as there are people with ill intent then that will be a problem. Privacy is important when it comes to online finances and the crimes that have been perpetrated does not outweigh the benefits of anonymity. I agree that money laundering is a big problem but if investigations and audits were efficient then they can apprehend who's behind the laundering.
And besides there are cases now that being resolved and some of them comes from using mixers yet they have been found.
I think this is why governments are very strict in Mixing company and couple had been banned and stop operation this past years.
Only the strongest and finest remain like Chipmixer.
Money laundering is not only in Crypto because like what says here
https://bitcointalk.org/index.php?topic=5277249.0Banks is more on the option of criminals before bitcoin even arrived.