What's your solution?

The issue that was faced is that banks could rightfully claim that they had no duty to verify identity and/or the legal status of funds they accepted on deposit. This led to all sorts of shenanigans like fraud, money laundering, and outright theft.

the KYC regulations are a compromise between having the government know EVERYTHING about your financial life. With KYC, it's the bank's duty to know at least a few things about you and your money to make it harder to use the financial system to conduct criminal activity.

I know a lot of folks like to believe in the libertarian paradise where no government can ever exercise power over you and each man is a sovereign unto themselves but the truth is that a true libertarian community wouldn't be someplace anyone wants to live.

The solution is to make prosecutors do their job instead of giving them an easy out, violating privacy to boot. Prosecutors could subpoena the bank and access the account's records, then continue chasing the criminals onwards.

SOOO....continue the madness that existed before we had compulsory KYC rules. The same rules that allowed the financial system to enable the exact criminal activity we'd like to prevent?

Gotcha.