How do they get paper USD into the bank in the first place? There must be something missing from this graphic. They probably take the money to a casino or buy gold and cash out chips/gold for fiat.
The "money laundering" happens in the red circle. The rest is just transportation of already money that's already been laundered.
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In the paper, they describe that they effectively use sort of mules to deposit cash into their own bank accounts. So the cash is split distributed and then needs to come back.
The paper is showing that crypto is being used to consolidate it together and get it across borders without the watchful eye of surveillance detecting it and being able to stop it.
Source is fairly linked to in the original article by the way... 

Sanctions and terrorism: How the cartels use crypto to launder the proceeds of narcotics trafficking
Discover how drug cartels use cryptocurrency for laundering narcotics proceeds and how blockchain analytics can help combat these illicit activities.