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Sure, but if you’re a tourist in e.g. Barcelona trying to get a prepaid SIM, odds are the shopkeeper will not ask you for your ID despite being required to.

> Last I traveled the shop required a passport or uploading one to get an eSIM ahead of time.

Sounds like you went to a carrier boutique and not one of the million independent shops.

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I would think most tourists would trust a carrier-branded store over Honest Jochen's Tobacco Emporium where you may or may not get a working SIM after paying cash.
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Trust? Sure. They’re still more likely to buy their prepaid SIM from the shop that also sells bongs, they are on every corner after all.
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Not a good example. In Spain they notoriously demand id/passport and make photo or copy of it, they do it "for the police".
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That’s the legal requirement yes, I’ve never seen a shop insist on it. Most of them have autofill scripts for the KYC forms.
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Isn't the main topic of discussion here a legal requirement?

If everyone ignores it then what's the fuss about?

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I’m just pointing out that in Europe the equivalent legal requirement is widely ignored, the same won’t necessarily repeat in the US, but it might.
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