4.8.2006 Official Journal of the European Union L 214/29 COMMISSION DIRECTIVE 2006/70/EC of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of ‘politically exposed person’ and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing ('), and in particular points (a), (b) and (d) of Article 40(1) thereof, Whereas: Directive 2005/60/EC requires institutions and persons covered to apply, on a risk-sensitive basis, enhanced customer due diligence measures in respect of trans- actions or business relationships with politically exposed persons residing in another Member State or in a third country. In the context of this risk analysis, it is appropriate for the resources of the institutions and persons covered to be focused in particular on products and transactions that are characterised by a high risk of money laundering. 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. In order to provide for a coherent application of the concept of politically exposed person, when determining the groups of persons covered, it is essential to take into consideration the social, political and economic differences between countries concerned. Institutions and  persons covered by Directive 2005/60/EC may fail to identify a customer as falling within one of the politically exposed person categories, despite having taken reasonable and adequate measures in this regard. In those circumstances, Member States, when exercising their powers in relation to the appli- cation of that Directive, should give due consideration to the need to ensure that those persons do not auto- matically incur liability for such failure. Member States should also consider facilitating compliance with that () OJ L 309, 25.11.2005, p. 15. Directive by providing the necessary guidance to insti- tutions and persons in this connection. Public functions exercised at levels lower than national should normally not be considered prominent. 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. Where Directive 2005/60/EC requires institutions and persons covered to identify close associates of natural persons who are entrusted with prominent public functions, this requirement applies to the extent that the relation with the associate is publicly known or that the institution or person has reasons to believe that such relation exists. Thus it does not presuppose active research on the part of the institutions and persons covered by the Directive. Persons falling under the concept of politically exposed persons should not be considered as such after they have ceased to exercise prominent public functions, subject to a minimum period. Since the adaptation, on a risk-sensitive basis, of the general customer due diligence procedures to low-risk situations is the normal tool wunder Directive 2005/60/EC, and given the fact that simplified customer due diligence procedures require adequate checks and balances elsewhere in the system aiming at preventing money laundering and terrorist financing, the application of simplified customer due diligence procedures should be restricted to a limited number of cases. In these cases, the requirements for institutions and persons covered by that Directive do not disappear, and these are expected to, inter alia, conduct ongoing moni- toring of the business relations, in order to be able to detect complex or unusually large transactions which have no apparent economic or visible lawful purpose.