Yes, it's true and there are some casinos that don't provide KYC requirements for their casino site users so gamblers who don't like KYC setup can play or bet at the casino.
If you say that KYC is not for security, but what actually happens is that KYC is made for security. As an example of what you have said, KYC is made to verify whether gamblers are in money laundering cases or citizens who are prohibited from using the site, then can't you take the main point, which is security for the casino so that no user is in a money laundering case, because if that happens then the casino site will also be in trouble in that case and be dragged into a case where the casino is a place of storage or duplicating money by the accused in money laundering cases.
So KYC also plays an important role for the security of a casino site.
Now the regulation is being tightened and the passing of KYC is mandatory in almost all exchanges, even decentralized and casinos. If a person has honestly passed KYC, then he will not cheat and will play honestly. Another thing is that the casino must ensure that all KYC players pass honestly, and do not buy accounts with passed KYC.