Means as long as the customer loses it does not matter if he breached their T&C using multiple accounts, playing from restricted countries and so on.
To be honest, most cases where I have seen been asked for a KYC is after a win or during a large withdrawal. I have never been asked for a KYC on any site, until I had deposited some money. I feel sites use the right to ask for KYC unfairly, I wish they just did it randomly and not at a point where they can take advantage of the users.