It's not good, of course, but a weak argument in favor of that behavior is that it could be preventing illegal activity (money laundering, sales of illegal items, etc.)
In theory, and being very generous to Shopify in this assessment, they may feel they are protecting themselves from legal or regulatory action by being very "cautious" with their clients (by shutting them down at the first hint of risk).
KYC should be done before any business is conducted, assuming it's an industry that needs KYC. But obviously if Shopify is going to be hyper sensitive in terms of KYC approval, then doing the KYC up front would mean they would not accept a lot of customers and thus would lose the business. Of course, if they're just going to shut down those customers after a week of business, that's obviously not going to build a long term relationship.
In theory, and being very generous to Shopify in this assessment, they may feel they are protecting themselves from legal or regulatory action by being very "cautious" with their clients (by shutting them down at the first hint of risk).
KYC should be done before any business is conducted, assuming it's an industry that needs KYC. But obviously if Shopify is going to be hyper sensitive in terms of KYC approval, then doing the KYC up front would mean they would not accept a lot of customers and thus would lose the business. Of course, if they're just going to shut down those customers after a week of business, that's obviously not going to build a long term relationship.