There are two parts to this.
They cant withhold a withdrawal if they havent received the docs required to verify the player as this has to be done before they allow the player to play in the first place and if they dont need AML(they will have a deposit threshold governing that, usually about 2k but some are much higher).
They can withhold a withdrawal if the need it for AML, I.e deposited over the threshold which has been listed in their T&Cs. They also should allow a player to withdraw and lock but not approve the withdrawal until docs received for SOW etc.
Wrong - strictly speaking if a SOW documentation is refused by a customer the withdrawal has to be honoured. Obviously no further deposits can occur on the account after that until SoW is satisfied. The UKGC handbook is clear on this aspect.