Assuming transfers only between bank accounts, so sending/receiving institution done the KYC, fully electronic transactions, and contract non-repudiation, very little can go wrong

Famous last words.

Fraud. What if you are required to return the inward deposit but cannot obtain the corresponding outward transaction. Or you can but lose money on the rate.

Bank transfers being reversible is the reason for the difficulty buying crypto at least years ago, maybe it is easier now.

FX services in my experience have a lot of staff and ask a lot of questions even for established accounts. Also the banks ask a lot of questions (although that is to the benefit of the FX service reducing the likelihood of fraud hitting the FX)

First thing that came to my mind - gonna get sued/shutdown by DOJ for ignoring KYC/AML stuff like every crypto thing that claimed the same.

There's probably a good reason they aren't operating in the US.

EU has nearly identical KYC and AML requirements...

We are actually working on it.

We are licenced and regulated by the FCA in the UK and the NBB in the EU – two trusted financial authorities that also regulate Wise. We therefore have to meet the expected high standards both authorities require from us, especially in terms of KYC&AML.