In order to fulfill the basic functions of our service, the user hereby agrees to allow Xiaomi to collect, process and use personal information which shall include but not be limited to written threads, pictures, comments, replies in the Mi Community, and relevant data types listed in Xiaomi's Private Policy. By selecting "Agree", you agree to Xiaomi's Private Policy and Content Policy .
Which region are you in? The feature is not available in some regions due to privacy policies and governmental laws. Unless and until they make some amendments in that, it won't work. Yes, the hardware is capable; it's just that the region specific laws prevent the use of face data for unlocking the device.
There are many other regions that have working face unlock feature like India, Hong Kong, Sri Lanka, Greece, France, UK, Poland, Malaysia, Singapore, Indonesia, Taiwan, and many more. You can switch to any of these supported regions to use face unlock.