KYC onboarding for small value transactions - finding the balance

Been thinking a lot lately about the increasing friction in onboarding, especially for fintechs dealing with smaller value transactions. While obviously AML is paramount, and nobody wants to be facilitating illicit flows, it feels like the pendulum might be swinging a bit too far in terms of the initial KYC burden for micro-transactions. Are we seeing a point of diminishing returns where the cost/effort of very deep-dive KYC on a low-value user actually deters legitimate activity more than it prevents significant bad actors? Curious to hear if others are navigating this tension and what practical solutions, if any, you've found to streamline without compromising compliance. It's a tricky balance between user experience and regulatory obligation.