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.

Right. So my answer to this question is no. "First, if you, an unbiased person, take a look at the above graphic by Elliptic, do you come to the conclusion that "unhosted wallets" are what enable cartels to launder money through cryptocurrencies? " The mules get the money into the existing financial system. There are tons of ways to do this that have nothing to do with cryptocurrencies. That's why KYC/AML is a waste of resources.

I mean reading between the lines, here's what I read: AML is not a catch-me-at-deposit type of thing. It is about letting people enter our mouse trap, looking for suspicious money trails and then accusing people without evidence of any wrong doing other than the movement of money seems suspicious. Bitcoin (and probably crypto in this case) provides a blind spot where funds can be aggregated and then brought back without the context needed to suspect people based on no evidence of crime. AFAIK, AML proponents believe they are the first line in discovering crimes by detecting AML and reporting it to police who then find the crime of origin. Its fucking backwards man.