I'm curious if anyone has ever said yes to income from illegal activities. Moreover, I wonder if something like this would be protected under 5th amendment.

I still don’t understand the CYA though.

For the majority of banks, they do not want people to conduct illegal activity via their bank. For the minority of banks which don’t mind it, nothing stops them from adding the clause anyways. A cartel bank probably cannot use the existence of the clause as a defense if they’re still allowing illegal activity.

If the purpose is to allow the bank to terminate accounts suspected of illegal activity, my assumption is they can already terminate for much less than that.

So, the entire legal system.

Legal matters are almost never black and white. If someone does something illegal using my service, and some other 3rd party sues me as party to that illegal behavior, from a legal perspective having a clause like "no criminal behavior allowed" in there makes it easier for your lawyers to argue "my client clearly didn't intend to authorize/facilitate such behavior". This argument is of course made much stronger if it is paired with behavior, like banning (or attempting to ban) the criminal user as soon as the activity was identified.

But if you are paranoid you should speak with a lawyer in your jurisdiction.

In most places it doesn't make a difference to the outcome of the legal process what it does do is give you a quicker simpler off ramp from the legal process (which reduces costs) and may stop some idiots even trying to sue in the first place.

"Do not iron clothes while on body" should not be required to not be found liable, but it does change the question in court from providing discovery for safety consideration, how comprehensive is the manual, how... and the costs involved with that to "Did the customer use the device in a way that was it was clearly labelled to not be used? Did any part of the product packaging or instructions contradict this warning? ...Dismissed".

I guess it’d be whatever the other party’s lawyer can persuade the judge into.

Encourage, probably not. Facilitate, possibly. That's why my bottle of Windex glass cleaner says "it's against federal law to use this product for anything other than its intended purpose."

In either case it's illegal for me to use it for bad purposes, but how much I can blame on Windex depends on how much they let me know that I shouldn't do bad stuff with their products.

Ask every account that has ever released information on drug use, lock picking, explosives manufacture, or "hacking" - they all say "for educational purposes only" for a damned good reason