When a caller press # to go for option as per called number requirements, user gets a prompt saying this is not a valid transfer and call gets disconnected or return but # (pound) are not sent to call. We already disabled ## and ### feature code but seems like its something else.
Assuming that these are calls made from a local extension via a trunk, try setting Asterisk Trunk Dial Options for the trunk in question to null (field should be left blank). This will disable in-call transfer by DTMF; you can still transfer a call using the Transfer key or softkey on the device.