EXPLAINER: What is a politically exposed person?

Commission Directive 2006/70/EC of 1 August 2006 lays down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council on the definition of ‘politically exposed person’.

Politically exposed persons are understood to be persons entrusted with prominent public functions, their immediate family members or persons known to be close associates of such persons.

Public functions exercised at levels lower than national should normally not be considered prominent – for example, local councillors. However, where their political exposure is comparable to that of similar positions at national level, institutions and persons covered by this Directive should consider, on a risk-sensitive basis, whether persons exercising those public functions should be considered as politically exposed persons.

However, EU rules also say that member states should define whether a politically exposed person remains such after having ceased to exercise prominent public functions, subject to a minimum period.

‘Natural persons who are or have been entrusted with prominent public functions’ shall include the following:

(a)       heads of State, heads of government, ministers and deputy or assistant ministers;

(b)      members of parliaments;

(c)       members of supreme courts, of constitutional courts or of other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances;

(d)      members of courts of auditors or of the boards of central banks;

(e)       ambassadors, chargés d'affaires and high-ranking officers in the armed forces;

(f)       members of the administrative, management or supervisory bodies of State-owned enterprises.

None of the categories set out in points (a) to (f) of the first subparagraph shall be understood as covering middle ranking or more junior officials.

The categories set out in points (a) to (e) of the first subparagraph shall, where applicable, include positions at Community and international level.

‘Immediate family members’ shall include the following:

(a)       the spouse;

(b)      any partner considered by national law as equivalent to the spouse;

(c)       the children and their spouses or partners;

(d)      the parents.

‘Persons known to be close associates’ shall include the following:

(a)       any natural person who is known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a politically exposed person.

(b)      any natural person who has sole beneficial ownership of a legal entity or legal arrangement which is known to have been set up for the benefit de facto of the with a politically exposed person.