Know Your Customer laws can directly transfer legal liability to banks, but it's not just that. The Bank Secrecy Act requires banks to provide "suspicious acti

Know Your Customer laws can directly transfer legal liability to banks, but it's not just that. The Bank Secrecy Act requires banks to provide "suspicious activity reports" on a wide variety of transactions, which can trigger seizure of funds without convictions. And structuring rules can make do the same to suspiciously-organized <$10k deposits even without evidence of other crime, which has happened to a number of small business owners who by sheer coincidence did that amount of revenue. Filing those reports can get all of the assets in question seized, and failing to file them or filing them too slowly can incur extremely large fines. So the bank runs the risk of 1. having the funds in question seized, so they don't even get to collect interest, and 2. being fined a large multiple of the amount of money in question any time they overlook an instance. That's not directly involving the bank in anything illegal, but it amounts to "if you handle suspicious transactions, you won't make money on them and can potentially be fined lots of money". It effectively threatens banks for working with anything that looks similar to illegal transactions, even if they know its a different industry. And since the private cash transactions for this sort of work can look like either escorting or drug-dealing...