I think this is heavily regulated. I can’t speak for all countries, but it’s like this: companies that have “report duties”, banks, but also realtors for example, must carry out money laundering checks. It’s usually an algorithm that rates all kinds of things. As soon as a company’s compliance department rates an incident as “required to report”, the bank files this to a financial crime unit.
But banks need to acquire additional paperwork first, the compliance department needs to finish its own investigation first. Source of funds checks for example. And this can take time when informations from third parties are requested. And as soon as the bank thinks this might be a case related to money laundering, they are legally bound not to tell the customer why he’s investigated, and access to funds is restricted.
So the only option banks have to speed this up is to speed up the internal investigation. More people. I don’t think “denying suspicious transactions” is an option. To an extend, this is what they’re already doing. Payments are pending, and they’re asking for additional proof of funds before transactions are released. If all those payments would bounce back – I don’t think this would be in any way less aggravating for customers.