Some would require a selfie verification to verify that you really own that government-issued ID because it might stolen by someone or for any other reason. Our local online wallet does that. It isn't in an exchange but you can't cash out your BCH, ETH, BTC and withdraw it into PHP (our local currency) without going into those verification.
That's a good way to prevent identity fraud for sure, but I was actually referring to exchanges working with two levels of verification. The first level only requires data in form of name, surname, date of birth, address info, and a telephone number. This is where a lot people cheat by abusing someone else's information to walk themselves through that verification process.
If the exchange wants your ID and documents to confirm if your account really belongs to you, then you are busted.
In exchanges like Binance, I don't trade that is gonna be equivalent to 1 BTC so I am not gonna needing those at least for now.
Binance has been the place to be for most people, which is more than understandable. I really do my best to find complaints in terms of frozen accounts and balances, but they rarely pop up, and that despite their insanely large user base. Definitely respect for that.