Most people also don't realize how ineffective KYC laws are. Studies have shown that they just don't work. Small time criminals use cash or barter, big time criminals infiltrate banks or have ties to international criminal organizations with their own shadow banking systems. It's just not a useful requirement and the significant costs outweigh the negligible benefits.
Creating a market for shadow banking systems is extra bad because then the large criminal organizations get the bank's margin which they can use to fund more criminal activity.
It's only then that we get to the privacy costs and chilling effects of putting everything people buy in a database. And the costs it imposes on marginalized populations. And the destruction of value of any service that can't exist because it would have to collect social security numbers from users or otherwise impose high transaction costs on low margin transactions.
I'm not entirely sure who the lobby for keeping them even is. People who don't know how ineffective they are? Banks who want to keep barriers to entry high? Just brute authoritarians who want to spy on everyone every way they can?