As said it is possible to trace out transactions as it is possible to differentiate exchange addresses from the Dex and other wallets. This gives the access and if the transaction is made to an exchange it is an easy task for them as most of the exchanges needs complete KYC to use their platform.
I noticed that you mentioned DEX and KYC requirements. DEX stands for Decentralized Exchanges, as far as I know. KYC is mostly associated with centralized exchanges and other services, like casinos.