It would correlate strongly with people trying to evade taxes and/or launder money. PayPal doesn't like to facilitate illegal activity. I'm not theorizing about this -- I have first hand knowledge.
Ok I am not trying to be dense. I really am curious. Maybe it correlates strongly, but there's nothing dishonest or illegal about it that I can tell. PayPal has all your personal info. They have your bank account info on both sides. People transfer money between. So maybe it's a pattern that money launderers use, but so do regular people. What am I missing?
PayPal isn't obliged to accommodate all legal banking patterns.
If 1% of all customers are fraudulent but 5% of customers with multi-country bank accounts are fraudulent, that might be enough to tip their risk/reward balance.
And I've dealt with this first hand. I have paypal accounts and legal bank accounts in multiple countries, and when I've tried to move money between them I get a call from customer service saying they blocked the transactions, and "you're not supposed to do that with paypal".
Paypal can't know that you're not doing money laundry even if they have the bank info on both sides. Paypal will err on the side of caution and will often block your transfers, no matter how many documents you can produce that claims what you are doing is legal.
I think you are assuming that paypal operates on reason, but it rarely does.