From CEX forum:
To clear everything up about the ID, this is not a requirement this is only to protect your accounts against financial losses due to the alarmingly increased amount of hacks we have been witnessing. So for example if your account is flagged as potentially compromised this account will be frozen in order to unlock it you will need to provide proper and legal identification. Another instance where we would need to request for an ID is for AML documentation this is for legal purposes as well.
If you want to avoid sending your photo ID in we have been strongly urging users to add 2 factor authentication the increase of hacked accounts has nearly tripled over the past few weeks. Most of these accounts are being compromised due to users downloading trading bots, email viruses, if you wish to keep your financial assets you currently hold with us at cex.io we highly suggest only logging in on trusted and protected PCs and having your 2FA enabled not only on your cex.io account but your email as well.
This new terms of service is not to exploit users identities its to protect YOUR money. Since we will not be held liable for users who have taken poor security measures we are doing what we can to prevent it from happening. What this all boils down to what is more important us potentially stopping a hacker and saving you hundreds if not thousands of dollars in bitcoins or refusing to send an ID when we see an account may be compromised and we want to be sure that it goes to its rightful owner.
January 07, 2014 11:06
https://support.cex.io/entries/37313623-Terms-of-service-change