I agree with your point of view, It's true that in recent years there have been several cases of laundering stolen money through online casinos or crypto assets.
So don't be surprised if casino sites require conditions to make KYC.
Parties from the casino also do not want to be involved and be harmed in any form by the laundering of stolen money carried out by irresponsible persons.
And the criminal is submitted someone KYC that he bought from a person who sold his identity since he's poor. Does casino asking KYC will prevent from money laundering? nope, does KYC make the criminal harder to do bad thing? yes. This mean asking KYC is useless if the criminal know how to escape from it. Now we have blockchain analysis who can track someone coins, but they still can't catch those criminals since they're more clever.
I think many of those poor people are only a victim and they don't know that their identities are going to be used for illegal transactions. Better if we will spread information about these matters so that cases like this are going to be prevented in the future. If KYC makes the criminal struggle then KYC is not totally useless.
There are ways for us to check the activity of the wallet but there is no way to see their full information such as their full name, address and contact details. Other than that, criminals can also use a mixing service to further conceal themselves from the authorities but fortunately, some of them are still being caught out.