bots would still be present if they only implement the KYC upon tournament registration. since they could just manually do KYC while using other people's credentials (Ex: Family members, friends, black market data sellers) and run the bot after the KYC. if their target is to remove the bots in such tournaments, they should go for a third party software detector that follows a set of algorithm in every games in the tournament and block it.
Though i don't think it will give top players an easier time to farm, since they would still need to battle it out from other players. but as you've mention, it will lessen the overall competition since less players could actually join.
I also agree that it would push other players/users not to be competitive or totally avoid it all in this tournament especially for countries which has strict issue about data privacy.