Why is KYC mandatory in CEX?

KYC is precisely the guarantee for user safety on any CEX. Just like banks and other financial institution needs to pass KYC verification. This action will help curb menace like terrorist financing, money laundering and other forms of criminality because individuals user legal identity is needed to pass the kyc. This will also help bring sanity to the space and eradicate any form of manipulations.

I believe that KYC is required by big centralized cryptocurrency exchanges (CEXs) like Bitget due to security and compliance concerns. I understand why they need it from a security standpoint.