Very suspiciously, almost like someone working with preventing money laundering noticed and sent them a letter reminding them about 18 U.S. Code §1956, which makes it a crime to assist in obfuscating the origin of proceeds from crime.

If you know about anyone using Monero for that purpose, you can't use Monero, since obfuscating the origin of transactions is something you do as a condition of participating in Monero (either as a miner or through paying transaction fees).

This is all US (and Western Europe) centric perspective. Last time I was in HK you could cash out basically any kind of crypto to cash easily, no questions asked. There will always be somewhere like that in the world