Recursive covenants dont automatically enable onchain kyc.
You can do onchain kyc today with 2/2 multisig.
Discussion
What pieces would be missing to implement on-chain KYC if recursive covenants are enabled?
Regarding the possibility to do it with multisig, my understanding is that it would be easier for regulators to have it implemented/enforced through recursive covenants.
The easiest way to do it is to just use custodial systems, which is the way everyone is going today.