Definitely, this is the exact reason why I do complete KYC on casino that has license to operate and good reputation.
There’s no way a legit business can operate without following the law especially AML policy so I totally understand the importance of what sure here that is good information to fight money laundering.
Choosing an old casino with good reputation to use and complete KYC before funding your account and using it for bet is acceptable. At least, you know that you won't KYC at a possible scam exit casino whilst surely there are still risks of data hacks and breaches in the future. If data breaches happen, your documents submitted for KYC will damage your privacy but it is not thing you can control.
KYC is always dangerous and people must assess many things before doing this.
Well there is risk everywhere but yes, it is better to do KYC and play at trusted platforms only. The reason why i am saying that there is risk everywhere, For example, a mishap can happen even at a old trusted casino too. The casino may not do any scam but what if the casino is hacked and the hackers manage to get the KYC data of the gamblers. For sure, the casino stores this digital KYC data in some server and a hacker may exploit any loophole if it exists. But this is what we have to compromise and hope nothing of this sort happens and everyone's data and money remains safe.