> Stopping crime by stopping money laundering will always have these problems, surely?

Yes.

Money laundering detection inescapably relies on private actors making a pre-prosecution estimate of whether money was earned illegitimately.

Private actors have much less information available to them than real law public sector enforcement.

And even with full information, trials cannot be predicted deterministically so there will always a gap those publicly deemed guilty and those privately deemed guilty.

Those in later category will suffer unjust financial hardship.

> Stopping crime by stopping money laundering will always have these problems, surely?

I believe so. The optimal amount of fraud is non-zero.

https://news.ycombinator.com/item?id=32701913

> Is there a way to inhibit CC fraud, and money laundering without making life difficult for people who are in the tails of the distributions?

Yes. Have better customer support and actually fix issues when they happen.

This ends up costing someone money.