Exchange asking for crypto customers passport copy

[niche]

Due to Binance ban, indian internet users are forced to use Indian exchanges. After using the BTC address provided by the Indian exchange, they are not crediting the amount to the account and are demanding a copy of the customers passport or driving license. The customer is a Spanish company who is paying a large number of workers, affiliates was earlier paying through Paypal. I receive Paypal payment from several companies outside India regularly, I am not asked to provide a copy of the customers passport or driving license for crediting the bank account.
Has anyone else faced a similar problem , and if yes, how was it resolved?