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Source of funds requests

Yes, that is a big problem with the EMIs - in many countries banks can't block your account, they either leave it active or they will tell you that they terminated the account agreement and in 30 days you should send money to another account in your name. Banks didn't use to ask that many questions even for large amounts if these amounts were regular and explainable. And definitely didn't block accounts unless ordered by the state prosecutor or similar authority.

EMIs on the other hand are in a gray zone, they aren't unregulated but they also aren't regulated like banks. So they do what they feel is right...

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A very fun story follows

I had my Revolut account blocked (no warning) for over 8 months. I transferred money (amount X) from my Revolut balance to the Revolut stocks section, then again (amount X) from the stocks section back to my Revolut balance, then made a small currency conversion and small payment, then transferred again the (amount X) back to the stocks section.

Shortly after, they blocked my account for any transactions and wanted me to provide source of funds for 6X (amount X times 6 ??????) because they told me I made 6 deposits with this money. They didn't care that these weren't deposits but internal transfers inside of Revolut. Each time I was assigned another "support agent" via chat, you cannot visit them, cannot call them, cannot email them. Just messaging via chat each time with a new dumb monkey trying to explain the same thing.
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The limits triggering these requests are an entirely different topic. For many of these reportings, the trigger amount of $10K or $15K applies - completely arbitrary number. In the US it was introduced by the Bank Secrecy Act in 1971 and hasn't been accounted for inflation ever since. So the reporting limit when it was introduced would equal to $75K in today's money, after inflation.

There are many bulls**t rules in specific countries, for example try withdrawing cash in Spain. The ATMs are limited to €200 maximum per transaction and €500 per day. Yes, that is not a typo and no, that is not a bank specific thing.

It is a two-lane world, if you are inside of the traditional system, the state wants to know everything about you and soon will. I don't know what's the solution.

Bitcoin was nice when it was new and noone in the government understood it or cared about it. Now the plan is to regulate crypto transaction even harsher than bank transactions (see AMLD 7, AMLD 8, AMLD infinity....).