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Take note that BTC is not a privacy coin, neither does it offer privacy on the protocol level, to achieve privacy with BTC, you need to use privacy solutions, or do BTC->xmr->BTC, and it is not everyone who knows how to stay private when they use BTC. Criminals also use other tools, like cash.
Yes, i know bitcoin is not a privacy coin, nor does it offer privacy at the protocol level. But it can use privacy solutions as you said, laundering from crypto to crypto looks more complicated, for that solution we have mixer services which when it is done, it is very difficult to track it. Such things don't exist with FIAT, there is always a way to track them, and that's why criminals prefer bitcoin.