AFAIK, even governments have no way to trace such activity in crypto transactions if one is already made for money laundering. IF, they know how to mix their coin for harder tracing the transactions.
The government should not worry about tracing cryptocurrencies but if they are legalized and every exchanges uses mandatory KYC once you convert your coins you need to explain to the government about the source of your amount. Considering the laundering amounts are huge it is impossible to do trades outside the exchange.
Despite saying that laundering might be possible but it is hard and it is easier to do that with fiat as people are laundering fiat for a long time and anyone who are deep into the shithole of making money illegal knows how to deal with them.