Section 3: Purpose of Regulations The purpose of these Regulations are

(a) to require financial institutions to establish and maintain specific policies and procedures to guard against the use of the financial system for the purpose of money laundering; (b) to enable financial institutions to recognise suspicious transactions and to provide an audit trail of transactions carried out by customers who come under investigation; (c) to require financial institutions to submit reports and to disclose information on suspicious transactions; and (d) to check the negative social, economic and political effects of money laundering and the financing of terrorism which include- (i) the facilitation of continuing criminal networks by money launderers; (ii) the erosion of the credibility of a financial institution that can affect the very stability of the financial markets; (iii) the erosion of investor confidence in legitimate financial institutions in an economy that has weak or no anti- money laundering laws; (iv) the promotion of transparency through the enactment of money laundering laws; (v) the distortion of the operation of the markets transactions effected for the purpose of money laundering may increase the demand for cash, render interest and exchange rates unstable and worsen inflation in the country; and (vi) the global nature of money laundering and the financing of terrorism problems that affect not only security and political stability, but also potentially harm economic prosperity and the state of the international financial system.