Meaning of " at arms length"

I would very much appreciate if I can be clarified with meaning of " at arms length".

The sentence says" Our legislation dictated that all transactions had to be done at arms length".

It means that you can not be to close to whatever is going on, though still keeping an eye on whatever is going on, therefore at arms length away.

I would add that “at arm’s length” is often used in contrast to an arrangement between family members or people who have some connection not related to the transaction. This means that some kind of favouritism may be at play making the deal not “at arm’s length”.