If you think wanting to hide previous/future transactions from other private entities is money laundering and illegal, I think you need to re-educate yourself on how that stuff works.
Money laundering is trying to hide the source or nature of illegal activities. Privacy in itself is not illegal nor money laundering.
But investigating money laundering and certain forms of organized crimes is extremely hard without being able to trace transactions. There's no point in having laws if they can't be enforced.
That's why a limited amount of privacy is all that governments with these kind of laws could possibly accept. That is: privacy from other private individual and organizations, and from the government as long as they don't have a court order to look into your transaction.
It might be possibly to design a cryptocurrency that satisfies government requirements, and maintains a balance between privacy and ability to investigate economic crimes, but I don't think most blockchain developers is interested in that.
Money laundering is trying to hide the source or nature of illegal activities. Privacy in itself is not illegal nor money laundering.