Even if there was some blacklist that all exchanges abided by, you can still use something like Ren Project to put your Bitcoin on Ethereum as renBTC, exchange it to USDC (or any other cryptocurrency) using a decentralized exchange, and withdraw it.
This process is completely decentralized, and AFAIK you can't trace the move from BTC to renBTC.
Remember that these are all public records which the authorities can monitor. If a blacklisted address transfers to another exchange, it’s not like the subsequent activity disappears from view - it just means that they look at the transaction chain on Ethereum, and add another money laundering charge to the tally.
This process is completely decentralized, and AFAIK you can't trace the move from BTC to renBTC.