Basically a similar service / API will resolve the issue of lost BTCs.

The scenario is very simple:
Setup 2 wallets: a non custodial wallet (wallet A) and a custodial wallet (or another non custodial wallet with different seed / passphrase) (wallet B).
Keep all your coins on your non custodial wallet (wallet A), don't keep anything on wallet B.
Do the KYC / AML procedure on the custodial wallet (wallet B), remember, you need this just in case you'll have to use your custodial wallet when losing access to your non-custodial wallet, hopefully you will never need it.

So, if you lose access to your non custodial wallet (wallet A), simply login to backup service and run the previously signed raw transaction that will send all your funds to wallet B where you can access it.

This scenario is just a piece of mind to recover your funds if you forget passphrase / seed phrase.