What does “prohibited transactions” refer to in compliance?

“Prohibited transactions” specifically refers to those transactions that are forbidden by regulatory restrictions or legal prohibitions. This can include various types of financial activities that are deemed illegal or unethical according to specific laws, regulations, or compliance standards. For instance, this may encompass transactions related to money laundering, fraud, or any activity that violates financial regulations established by governing bodies.

Understanding this concept is vital for compliance professionals, as engaging in or failing to properly monitor such transactions can lead to serious legal repercussions, including fines and sanctions. Consequently, ensuring that all transactions comply with legal standards is essential for any organization to avoid potential liabilities.

The other options do not capture the full scope or the seriousness of what "prohibited transactions" entails. Documenting transactions, providing discounts, or involving non-financial services do not inherently signify a violation of laws or regulations, which is the key aspect of prohibited transactions.