> Like, the laws are passed by governments.
Sure, but do you think the government writes them themselves? Without any input from the industry?
> How does this benefit said financial institutions?
One of the best ways to get ahead in finance is to get a regulation passed that's easy for you to comply with but hard for your competitors. That's what drives a lot of the laws.
> One of the best ways to get ahead in finance is to get a regulation passed that's easy for you to comply with but hard for your competitors. That's what drives a lot of the laws.
This I totally agree with, however, the AML/KYC laws are not those kind of laws. They are super expensive for basically every financial institution, for dubious returns. And yet, governments love them. The US basically forced the Swiss to introduce these laws post GFC, which doesn't sound like it was driven by the Swiss financial institutions.
And literally the first paragaph of the Wikipedia article (https://en.wikipedia.org/wiki/Bank_Secrecy_Act) notes that loads of people sued when the act was introduced, suggesting that it wasn't driven by industry pressure.
Like, it's interesting that these laws are the template for all the ChatControl/break encryption type stuff. Governments already have all the financial information and they see no reason why they shouldn't have everything else.