The missing bit is that compliance is for governments and business partners, not for any end-users. For the purposes of KYC/AML process, end-users are objects, not subjects.

Your coins frozen with no reason given even internally except for "machine said no" - no one gets any slap on the wrist unless you sue real hard, happen to win, and most likely that'll be just a scratch that won't be noticed enough to change any attitudes.

The Man sees that someone they don't like transferring their coins through the fintech company - that's what those companies are really concerned about, because it would be a punch in the gut the company will feel.

Thus, the incentives. Current social design doesn't punish for false positives (until they hit really high levels), only false negatives.