Yea, I 'unfortunately' have to agree with you on this. It's completely warranted for KuCoin to suspect me of money laundering and require a CDD.
That's not really what I'm complaining about. At least for my case.

It's more of a best practice question if they offer the service as they do if they know they won't fulfill it like this.

The 5 BTC withdrawal limit would always warrant the requirement of CDD if they want to be AML compliant.
So it's this case by case decision that annoys me.
I get flagged for possible money laundering, and even after providing them with all they would need to free me from the suspicions they do not act on it.
While reported scammers that use KuCoin to launder stolen funds are protected.

The amount in question would not warrant AML actions as it does not surpass these thresholds. So they are holding my funds subject to their self-imposed risk screening. Based on this they could have cleared me after verifying the legitimacy of my funds, which would have been easy.
But even if I don't agree with the process, I do understand why they would want that as it's their procedure.

But, as soon as it could be verified that I am the beneficiary owner of the funds and that the funds are not involved in criminal activity, they should have cleared the suspicion and from a legal point of view and AML regulations, they are free to return my funds to me.
Even without KYC as I am not surpassing the $8k CDD threshold by AML regulations.

So based on this they should have offered me to go through KYC and execute my withdrawal as par their ToS, or close my account and return the funds to where I sent them from.

But instead, they are trying to coerce users into giving them information that is not covered in the requirements of international AML CDD, as those pretty clearly state what is required to be compliant.
This is getting even more critical by asking me to provide this information basically publicly.

If their internal risk management flags an account, but the legitimacy of the funds can easily be verified, there is no legal need for AML based CDD unless other requirements are triggered.
So what they are trying to enforce beyond this is up to them.