This is important because it restores individual's privacy, creates a sense of trust and makes normal day-to-day life easier.
Have you tried to open a bank account, set-up a utility account, use a solicitor. Each time you need to prove identity, requiring (usually) a passport and a utility bill. This is onerous and state intrusion in everyone's daily lives. Why is this like this? Money laundering regulations with the idea that criminals will use these processes to launder money – they may do but I'm sure that despite this legislation criminals are doing fine. Meanwhile all of us have to put up with this tedious, intrusive requirements.
Have you ever tried to withdraw a few hundred pounds in cash from a bank cashier? For the same legislative reasons you're asked what you're going to do with the money. Presumably this is to catch criminals who might actual say that they are laundering money. In fact this makes every innocent person feel like they've done something wrong when withdrawing their own money. Why should the state have any interest in citizens taking our own money out of our own bank accounts