Accountable institutions are prevented by section 21 of the Act from concluding certain transactions unless they have established and verified the identities of their clients.

The term "transaction" is defined in the Act as follows:

"’transaction" means a transaction concluded between a client and an accountable institution in accordance with the type of business carried on by that institution;".

While this definition does not attribute a particular meaning to the term "transaction", it conveys the concept that the term may have different meanings depending on the type of business, undertaken by different accountable institutions and would be applied differently among them. In short, the term must be applied in each instance in accordance with the nature of the business carried on by the accountable institution in question.

This definition also indicates that the term refers to activities which take place between an accountable institution and a client.

The dictionary meaning of the term "transaction", as taken from the Concise Oxford Dictionary, includes "management of business" and "piece of especially commercial business done". Applying this definition, a transaction can therefore generally be described as an instance of commercial activity between two or more parties.

Transactions are concluded on the basis of agreements between the parties to a transaction. Following the definition of the term "transaction" in the Act, as well as the dictionary meaning of the term, these agreements must be aimed at a piece of business done between an accountable institution and a client, in accordance with the nature of the business carried on by the institution concerned. A basic guideline, which can be inferred from this, is that any instruction or request by a client to an accountable institution to perform some act to give effect to the business relationship between them can be regarded as a transaction.