What is the central purpose of anti-money laundering regulations?

The central purpose of anti-money laundering (AML) regulations is to prevent illegal activities related to income generation. These regulations are designed to detect and deter the process of laundering money derived from criminal activities, such as drug trafficking, fraud, or corruption. By establishing stringent reporting requirements, customer due diligence obligations, and monitoring of suspicious transactions, AML regulations aim to create a financial environment that is less conducive to illicit activities. This, in turn, helps to uphold the integrity of financial institutions and prevents criminals from integrating their ill-gotten gains into the legitimate economy. By targeting the concealment of origins of illegally obtained funds, AML regulations play a vital role in enhancing the overall security and stability of the financial system.