In a recent letter [N. V. Krishnendu et al., PRL 119, 091101 (2017)] we explored the possibility of probing the binary black hole nature of coalescing compact binaries, by measuring their spin-induced multipole moments, observed in advanced LIGO detectors. Coefficients characterizing the spin-induced multipole moments of Kerr black holes are predicted by the no-hair conjecture and appear in the gravitational waveforms through quadratic and higher order spin interactions and hence can be directly measured from gravitational wave observations. We assess the capabilities of the third-generation gravitational wave interferometers such as Cosmic Explorer and Einstein Telescope in carrying out such measurements and use them to test the binary black hole nature of observed binaries. In this paper, we extend the investigations of our previous work, by proposing to measure (a) spin-induced quadrupole effects, (b) simultaneous measurements of spin-induced quadrupole and octupole effects, in the context of the third-generation detectors. We find that, using third-generation detectors the symmetric combination of coefficients associated with spin-induced quadrupole moment of each binary component may be constrained to a value $leq 1.1$ while a similar combination of coefficients for spin-induced octupole moment may be constrained to $leq 2$, where both combinations take the value of 1 for a binary black hole system. Further, we consider two different binary black hole populations, as proxies of the population that will be observed by the third generation detectors, and obtain the resulting distribution of the spin-induced quadrupole coefficient. These estimates suggest that third-generation detectors can accurately constrain the first four multipole moments of the compact objects (mass, spin, quadrupole, and octupole) facilitating a thorough probe of their black hole nature.