I don't know if these control systems really help protect honest traders. It seems to me that not only are they useless, but they expose them to the theft of data and documents by the bad guys, while the scammers quietly continue to make their own comfort.
It suppose to help the traders because that's the purpose of KYC, but when the exchange is irresponsible, it will not be able to serve the purpose.
Once the exchange requires for the KYC, this means they are required also by the government to impose the same, and when they mess up with the data, the government are looking into this as an offense and they will have to be dealt accordingly based on the rules and regulations impose to them as well.
We don't need to worry, the government are punishing those corrupt exchanges, even how big they are currently.