They lock down donations to any unpopular group, and refuse to release already-held funds. They freeze Kickstarter campaigns as soon as someone says the word "fraud", and cause the exact damage they're trying to prevent by tying up all the funds so neither backers nor creators can get the money.

They're incredibly capricious, and as far as I can tell have taken the stance that overcaution is always acceptable.

As far as donations for dubious causes goes well if they think that it will either lose them business due to reputation, or worse lose them money if a government decides to freeze those funds they will cut it off.

PayPal for the most part is not a fractional lender when you have a 1000$ in a PayPal account PayPal has to reserve the full amount, PayPal isn't protected from a run over by central banks and what limited protection it has is probably performed by underwriters at not the most beneficial of terms.

If some one is opening a donation account for ISIS, anti LGBT or w/e you might call an "unpopular cause" and that either causes them a huge PR headache or worse a government decides to freeze those funds they lose a lot of money. This can be complicated even further since while the funds are frozens the users who transferred these funds might be eligible for protection under PayPal's own policies and if not then they can always initiate a chargeback from their own credit card company.

It is true that banks will go a long way to try to satisfy banking regulators. But unless you have some evidence I am simply unwilling to believe that banking regulators can make up any restrictions they like without regard for the actual requirements of federal law.

The actual requirements of federal law are often (intentionally) formulated on such a high level that in practice, the banking regulator does end up specifying the actual rules.

Say, for example, a federal law requires that banks "take reasonable measures to impede money laundering".

Now what those "reasonable measures" are is usually determined by the overseeing regulator (eg: the SEC). Sure, you can disagree with their assessment, but they'll fine you anyway and then, the best-case scenario is that after X years in court, the fine gets overturned.

Point being, regulators can justify just about anything. That is why all large banks have an army of lawyers. They then work with regulators to find some middle ground.

And the bank has to do it or they end up like HSBC. In fact, that was exactly why HSBC was fined billions. Regulators told them to do specific things, like use Form X in Iran instead of Form Y, or classify Mexico with risk measure N+1 instead of N, and they didn't do them. This is all in the various public records.

e.g. from https://www.theguardian.com/business/2012/dec/14/hsbc-money-...

"In some branches the boxes of cash being deposited were so big the tellers' windows had to be enlarged."

This entire subthread is about how AML is enforced. Specifically, it's enforced by regulators doing whatever they feel they need to do. The punishment wasn't for money laundering, it's for money laundering in a manner that obedience, according to the regulators, would have caught.

For international banks, it's especially arbitrary because regulations are so loose overseas. In the UK it's very easy to move small amounts anonymously. This is routinely used for small-time laundering by organized crime and banks are fully aware of it. The long arm of US law goes after UK banks handling Mexican dirty money, but not UK banks handling UK dirty money. A lot of what constitutes "illegal money laundering" is actually political.

GP was making a vague reference to Rulemaking.

You should be willing to educate yourself, not be https://en.wikipedia.org/wiki/Rulemaking