How can you launder something with a traceable serial/transaction number? I don’t think it’s possible. The best you can do is mix it with enough other transactions that it becomes murky as to the final destinations.

Ex: If half of the bitcoins used to buy a car were fraudulent, would you need to return half the car?

So, it is slightly more complicated than a serial number. In some sense, everytime you make a transaction, you burn all the input coins and creates new coins for the same value, each assign to the respective recepient. Tracking them is not straight forward. Most OTC are not very tech savvy and I can imagine one either being criminal but stupid for bringing it to Bitfinex or simply non criminal but did not do their due diligence and KYC the seller (which is very surprising knowing the space)

The point isn't to make the coins themselves clean, it's to exchange them for something clean.

So a laundering service could specialize in buying tainted coins and to sell them off to other unsuspecting people, pocketing the difference. In return they could provide clean coins for their customers.

you can pay bitcoin to mine bitcoin or other cryptos. Thus getting "clean coin"

If bitcoin is not treated as legal currency, then the person you bought the car from would be required to return half the coins you have them to the original owner as they would qualify as stolen property.

This risk would have to be managed by contracts, insurance, and/or quick exchange for safer assets.