I’m confident it’s an AML issue because they’re getting stonewalled which is standard operating procedure when a Suspicious Activity Report has been filed. I don’t think using Stripe Connect is the red flag.

The thing with SARs is that they tend to be cascading as OP described. So if I (innocently and totally coincidentally) do a transaction with someone who has been flagged for suspicious activity my account might now be flagged as “higher risk” for suspicious activity and will be monitored more closely.

And, if they decide they’ve found suspicious activity in my account then everyone who does business with me is at risk of having their accounts flagged as “higher risk” for closer monitoring and so on.

And the bank isn’t allowed to tip anyone off because if any of those accounts are actually laundering money they might suddenly withdraw it and then the “lead” from the SAR is moot. It’s actually a crime to notify someone about the suspicious transaction(s). Which is why you get stonewalled.