can be done, but often isn't. It requires someone to be suspicious to trigger the various institutions to start tracking it.

there is lots of scope for laundering by giving the cash to third parties, before it gets to the banks.

Laundering inside bitcoin is pretty futile, because we can trace from mining to current wallet. we don't even need to trace all bitcoins.

All you have to do is pay for something illicit, and you can trace the flow of money from wallet to wallet, until its either converted into real cash, or held as a "reserve"