I'm not sure it does illustrate that. I don't disagree with the point, necessarily, but I don't think this story makes that point. As described here, the money was stolen and then stored. It does not get into how it was spent. Laundering is needed to make illicit cash liquid. This illustrates, once again, that markets are any thing but free. There are eyes watching transactions and anomalies attract attention.
We need to know about the money flowing back out of the Lebanese bunker. This story does not make the point, but if the Iraqi officials who spirited the cash and gold away are supporters of ISIS, perhaps these funds of U.S. origins are being used to pay the fighters. These relatively meagre sums are then being sent to family members and used to buy daily provisions. Having been shattered into thousands of shards, the funds become much harder to track. Just like the fighters who are mixing into civilian Sunni populations, the purchases of ISIS fighters mix in with those of their neighbours.
This thought experiment does illustrate your point, Joe. Within the sphere of local economies, where small-time gangsters spend their 'earnings,' laundering is not needed. By the time those funds again agglomerate, say with a regional importer, they have been legitimized by the licit transactions of daily functioning. If an ISIS bagman comes around to collect a 'donation' from the importer, then a closed loop gets added that can recirculate the funds.