LE are not fighting money laundering or illicit funds with all of these regulations, because BTC is not the main tool used by fraudsters for money laundering, LE are doing this because they want to have 'eyes' on your money, they want to be able to link addresses and tell which belongs to who, they want to attack BTC fungibility by calling some coins 'tainted', this is their primary goal and not to fight money laundering.
services flagging deposits due to taint of mixing.. is not due to LE watching that transaction taint. its due to the
service watching.
those services then have to do internal investigations to see if it reaches a threshold of suspicion
to then report it to LEnot all transactions get seen by LE
LE does not watch everything. they just get the juicy reports of activities that reach a certain level of suspicion
its these
services that dont want the headaches of watching, investigating and reporting. because if they make a mistake they can be fined..
receiving funds. which they do no due diligence on. and dont report any suspicious risk, makes the service liable/associated with proceeds of a crime..
so most prefer to just avoid payment methods which can result in more workload/fines for them
when we see mixer affiliates just shout "everyone should use mixers" that is not advice. thats advertising. and its advertising of things that cause more headaches and more negativity for users and services
what operators of "mixers" should do is rebrand. change their code, change the methodology and be smart of offering a service that does not advertise itself as something that is regulatorally listed as suspicious. end result for users is they get funds with different taint (sale goal) but advertised, described and functionally different to what regulations describe
then services wont flag it and wont report it and the world is a better place