Your right. There is a verse, Surah Al-Ahzaab, Verse #59. What makes the interpretation of scholars defer is that some interpret the words of Allah "better for them" to be obligatory while some say its not obligatory but just "better".
(I follow the opinion of the Sheikhs that its not obligatory but a rewarding act provided its not forced upon anyone and is done with knowledge and by choice)
That said when however faced in a situation like mentioned in the op one shouldn't hesitate to comply,Allahu alam, simply cos its clearly not a agreed upon obligatory act and by refusing you can encounter worser evils, specially since its a matter of identification and security concern, and the fact that you are in a non Muslim country too.
And to answer Nomerci,yes we have faced situations in Qatar during the process of applying for the visa, where due to the fact that there was no woman available, we had to reveal our faces to a male officer. And again we agreed willingly since its a law.Mind you this being a Muslim country.