> Expecting the intersection of these to be literally zero is an unreasonable standard.

Nobody expects the intersection to be zero - not the banks, not the regulators. The rule is that banks must take prudent measures, and the definition of that has evolved over time (as financial crime has evolved over time).

Google "risk-based anti-money laundering approach" or if you'd like a more thorough introduction, listen to the Dark Money Files podcast.

I have libertarian sympathies too, especially since most AML rules were originally established to fight the war on drugs (my sympathies lie with the dealers, sorry). But I'm pretty happy to make life hard for terrorists, bad governments, and kleptocrats - who, unlike the characters in Reefer Madness, are not just bogeymen.