From: Urmas Pai
To: Otto de Voogd
Sent: 2014-02-13 11:15 +0200
Subject: www.btc.ee
Lp. www.btc.ee esindaja Otto Albert de Voogd.
Pöördume Teie poole rahapesu andmebüroost, mille ülesannete hulka kuulub Rahapesu ja terrorismi rahastamise tõkestamise seaduse (RahaPTS) § 37 lg 4 kohaselt riikliku järelevalve teostamine nimetatud seaduse nõuete täitmise osas kohustatud isikute majandustegevuses.
Eesti interneti SA andmetel olete Eesti registripidaja juures registreerinud domeeni www.btc.ee, kus kaubeldakse bitcoinidega.
RahaPTS § 3 lg 1 p 2 kohaselt on kohustatud isikud seaduse täitmisel muuhulgas ka finantseerimisasutused.
Finantseerimisasutuste alla kuulub RahaPTS § 6 lg 1 p 4 kohaselt ka alternatiivsete maksevahendite teenuse pakkuja. RahaPTS 6 lg 4 sätestab alternatiivse maksevahendite teenuse mõiste:
(4) Alternatiivsete maksevahendite teenuse pakkuja on isik, kes oma majandus- või kutsetegevuse käigus ostab, müüb või vahendab side-, ülekande- või kliiringsüsteemi kaudu rahalist väärtust omavaid vahendeid, mille abil on võimalik täita rahalisi kohustusi või mida saab vahetada kehtiva vääringu vastu, kuid kes ei ole lõikes 1 nimetatud isik ega finantseerimisasutus krediidiasutuste seaduse tähenduses.
Bitcoin vastab just sellele definitsioonile. Piiratud ulatuses on bitcoin maksevahend ja seda saab osta ning müüa reaalse raha eest.
Seega peab bitcoinide ostu-müügiteenust pakkuv isik täitma RahaPTS nõudeid kui ta Eesti serveri kaudu teenust pakub.
Rahapesu andmebüroo teostab alternatiivsete maksevahendite teenuse pakkuja tegevuse üle järelevalvet tulenevalt RahaPTS § 47 lg 1.
Sellest tulenevalt sooviksime Teiega kohtuda, et selgitada seaduse nõudeid ning teostada järelevalvet senise tegevuse üle alternatiivsete maksevahendite teenuse pakkumisel.
Palume meiega alltoodud kontaktidel esimesel võimalusel ühendust võtta, et saaksime kokku leppida kokkusaamise aja.
Lugupidamisega
Urmas Pai
Rahapesu andmebüroo
tel +372 6 [snip]
faks +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Sent: 2014-02-13 11:50 +0200
Subject: Re: www.btc.ee
Tere Urmas,
Vabandage et minu Eesti keel ei ole nii hea et ma sain keerulised teemat räägida Eesti keeles. Kui on võimalik teha Inglise keeles siis eelistan seda.
Thank you for your invitation. I have been having a number of questions myself about this very topic, (basically the same questions that Tavid submitted to Estonian regulatory bodies, see: http://e24.postimees.ee/2671592/tavid-kaalub-bitcoiniga-kauplemise-alustamist ).
I would therefor be very happy to meet with you, in the hope to have some of these things clarified and get your advice.
What would be a convenient time for you to meet?
Mob. [snip]
Kind regards,
Otto de Voogd
From: Urmas Pai
To: Otto de Voogd
Sent: 2014-02-13 12:20
Subject: Re: www.btc.ee
Dear Mr. De Voogd
For us, it’s possible to meet you any time on next week exept Wednesday. Is it possible for you to accept us in your office on Monday, 17.02.2014 at 10.00 o’clock. If you do not have office of your own then you are most welcome to meet us in our premises located at Tööstuse 52, Tallinn. Please let us know of your choice.
Regarding the matter of language, It’s no problem for us to explain the law in English, but according to Estonian Administrative Procedure Act, the state supervision should be held in Estonian.
§ 20. Language of administrative proceedings
(1) The language of administrative proceedings shall be Estonian.
(2) Foreign languages shall be used in administrative proceedings pursuant to the procedure provided for in the Language Act.
Therefore, if you should need a translator during the supervision, you are allowed to get one. According to Estonian Language act:
§ 12. Access to public administration in foreign languages
(1) If an application, request or other document submitted to a state agency or local government authority is in a foreign language, the agency has the right to require the person who submits the document to submit the translation of the document into Estonian, except in the case provided for in § 9 of this Act. The person who submits the request or other document shall be notified of the requirement for translation immediately.
(2) In the cases provided by law, a state agency or local government authority has the right to require the translation made by a sworn translator or certified by a notary. If the required translation is not submitted, the state agency or local government authority may return the document or have it translated with the consent of and at the expense of the person who submitted the document.
[RT I, 23.12.2013, 1 - entry into force 01.01.2014]
(3) A state agency or local government authority shall respond in Estonian to the document in a foreign language, except in the case provided for in § 9 of this Act. Should the person who receives the document express a wish to get the answer in a foreign language, the response may be translated into a foreign language at the expense of the person who receives the document. On the agreement between the person who receives the document and the state agency or local government authority the response to the document in a foreign language may be given in a foreign language understood by both parties.
(4) In oral communication with officials or employees of state agencies and local government authorities as well as in a foreign representation of Estonia and with a notary, bailiff or sworn translator or in their offices, a foreign language may be used by agreement of the parties. If no agreement is reached, communication shall take place through an interpreter and the costs shall be borne by the person who is not proficient in Estonian, unless otherwise provided by law. This subsection shall not apply in the case provided for in § 9 of this Act.
Best regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Sent: Thursday, February 13, 2014 12:39 +0200
Subject: Re: www.btc.ee
Tere Urmas,
My understand is that this talk, will be about clarification of the law, so it would be ok to do it in English.
Is there someone in your team with expertise on Bitcoins?
Regards,
Otto
From: Urmas Pai
To: Otto de Voogd
Sent: 2014-02-13 13:31 +0200
Subject: Re: www.btc.ee
Dear Mr. De Voogd
Actually what we are planning to do is to condact a state supervision under the entity who is providing financial services in public webpage www.btc.ee.
Explaining the demands of Estonain AML law is just one part of it (and this we can do in English).
The main goal of supervision is to identify who is offering the service on the webpage (there is no information) and if the Estonain AML law is followed while doing business.
For that we would like to see the data of transactions, copies of documents used during the process of identification of clients if they have done transactions in sum of 1000 EUR during one calendar month, internal procedures of conducting the due diligence measures, information about registration and etc.
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Sent: Thursday, February 13, 2014 13:34 +0200
Subject: Re: www.btc.ee
Tere Urmas,
My "office" (for btc.ee) is a coworking space, many other people work there, so it's probably not suitable for having such a meeting. It would be better I think to come to your office.
I will take along a friend, who is Estonian and studies law.
A time that would suit both of us is:
Thursday Feb 20th at 13:00.
Please let me know if this time is also suitable for you.
Kind Regards,
Otto de Voogd
From: Otto de Voogd
To: Urmas Pai
Sent: Thursday, February 13, 2014 1:59 PM
Subject: Re: www.btc.ee
Hi Urmas,
Re:
For that we would like to see the data of transactions, copies of documents used during the process of identification of clients if they have done transactions in sum of 1000 EUR during one calendar month, internal procedures of conducting the due diligence measures, information about registration and etc.
I have a log of all transactions, with identies, which I can show you, provided I can access the Internet at your office via *my own* laptop.
What do you mean with "information about registration"? What registration are you referring to?
In how far does this law apply to private citizens? For instance there are numerous people buying and selling Bitcoins in Estonia offering their services on localbitcoins.com?
If two individuals exchange bitcoins, which of the two carries these obligations?
In the eyes of Estonian law, what is Bitcoin? A currency, a raw material like gold, an investment instrument like stocks or bonds, or something else?
I hope you can clarify some of these questions.
Kind Regards,
Otto
From: Urmas Pai
To: Otto de Voogd
Sent: 2014-02-13 14:00 +0200
Subject: Re: www.btc.ee
Dear Mr. De Voogd
Yes, the time you offered is suitable and we’ll be waiting you on 20.02.2014 at 13.00 (Tööstuse 52, Tallinn – please ask for Mr. Urmas Pai from control desk).
Please bring along all the documents that I mentioned in previous e-mail (data of transactions, copies of documents used during the process of identification of clients if they have done transactions in sum of 1000 EUR during one calendar month, internal procedures of conducting the due diligence measures, information about registration and etc).
Best regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Urmas Pai
To: Otto de Voogd
Sent: 2014-02-13 14:46
Subject: Re: www.btc.ee
Bitcoin suits under criteria of alternative means of payment according to Money Laundering and Terrorist Financing Prevention Act (RahaPTS) § 6 lg 1 p 4 (https://www.riigiteataja.ee/en/eli/523122013005/consolide), therefore the demands of the law should be followed while providing the mentioned service.
As far as we see, the service is provided for everybody on website (registered in Estonia) www.btc.ee and you have registered that webpage. We are intrested in information who is providing the service (is it some legal person or private person) and if AML law is followed. As we see, the transactions of selling and buying of bitcoins can be made on webpage and everybody can to that. That is the difference between offering the service and just doing transactions with friends (occasional transactions is not offered for everybody, therefore in most of times it can not be handled as offering the service).
Documents we are asking to see are compulsorary by the law as shown:
1) Copies of ID-s of clients - § 23 lg 1
2) Internal measures or procedure of due diligence . § 29 lg 1
3) Registration - § 52 lg 1 p 5
Also, doing business without being previously registrated (§ 52) may cause a criminal investigation according to Estonian Penal Code:
Chapter 21 ECONOMIC OFFENCES
Division 1 Illegal Economic Activities
§ 372. Economic activities without activity licence and prohibited economic activities
(1) Economic activities in a field subject to a special prohibition, or activities without an activity licence, other licence, registration or through an unapproved enterprise in a field where such activity licence, other licence, registration or approval of enterprises is required,
is punishable by a fine of up to 300 fine units or by detention.
(2) The same act, if:
1) it is committed by a person who has previously been punished by such act;
2) danger to the life or health of numerous people is caused thereby, or
3) it is committed within a field of activity related to health services, handling of infectious materials, aviation, railway traffic or provision of credit, insurance or financial services,
is punishable by a pecuniary punishment or up to 3 years’ imprisonment.
(3) An act specified in subsection (1) of this section, if committed by a legal person,
is punishable by a fine of up to 32,000 euros.
[RT I 2010, 22, 108 - entry into force 01.01.2011]
(4) An act specified in subsection (2) of this section, if committed by a legal person,
is punishable by a pecuniary punishment.
(5) A court may, pursuant to the provisions of § 83 of this Code, apply confiscation of a substance or object which was the direct object of the commission of an offence provided for in this section.
[RT I 2007, 13, 69 - entry into force 15.03.2007]
Best regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 [snip]
tel. direct +372 [snip]
fax +372 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Sent: 2014-02-13 15:02 +0200
Subject:
Hi Urmas,
One more question, could you provide me with the legal reference to the
1000 Euro per month threshold that you mentioned?
Chapter 2 par 12 (2) 1 mentions a 15,000 Euro threshold, I can not find
any reference to a 1000 EUR threshold in the law.
Please advise,
Otto
From: Otto de Voogd
To: Urmas Pai
Sent: 2014-02-14 11:02
Subject: Re: www.btc.ee
Tere Urmas,
You quoted a 1000 EUR monthly threshold:
"if they have done transactions in sum of 1000 EUR during one calendar month"
I'd like to know where this appears in the RahaPTS law.
Neither I, nor anyone else I have asked can find it.
To my knowledge the threshold is 15,000 Euros as that is the threshold stated in the relevant act and there is no obligation to report transactions below that threshold.
Regards,
Otto
From: Otto de Voogd
To: Urmas Pai,
Sent: 2014-02-17 11:02
Subject: Re: www.btc.ee Change of date and venue
Dear Mr. Pai,
Due to circumstances I will not be able to attend on Thursday.
I offer instead:
Friday Feb, 21st at 14:00
Also I have arranged for one of the rooms at the coworking space to be
reserved for us, where I will receive you:
Rävala 8,
10th floor
Tallinn Coworking Space
Please confirm.
Otto de Voogd
From: Urmas Pai
To: Otto de Voogd
Sent: 2014-02-17 16:23
Subject: Re: www.btc.ee
Unfortunately I'm already booked on Friday, so it would be impossible for us to meet you on 21.02. Please send us available dates for you so we could choose and agree on new time of venue.
Since you indicated that all of your data is available electronically, you can meet us in our premises as we agreed and no exceptional rooms will be needed to book in advance.
Also, please clarify, if you were selling and buying bitcoins via www.btc.ee as private person or was the service provider somebody else (some legal person for example)?
As reply to your question about threshold of 1000 EUR per calendar month and identification , please see RahaPTS § 15 lg 8 and § 23 lg 1 - 2 respectively.
Best regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Date: Tue, 18 Feb 2014 17:59:59 +0200
Subject: Re: www.btc.ee Change of date and venue
Dear Mr. Pai,
Thank you for your answer.
Unfortunately I was busy today and will be busy tomorrow with a
training, which doesn't leave me much time to arrange anything (and as I
am not at work I don't have access to my agenda right now), but
hopefully by Thursday I'll get back to you with possible times for a
meeting next week.
Regarding your question about btc.ee, could you first clarify for me, on
what legal basis you think that Estonia has jurisdiction over a
server or a website that is not located in Estonia?
I would also appreciate if you could provide me with the following
information prior to our meeting:
1.a. Who decided that Bitcoin is a "service of alternative means of
payment" rather than say an e-currency or a commodity? Is it your own
opinion? Or is it the outcome of an analysis by an Estonian governmental
institution?
1.b. If the latter, then please provide me with the reference, text and
date of publication of that decision/analysis. If it's not public, why
has this not been made public?
2. What are the characteristics that differentiates an economic or
professional activity from a non-professional activity? What
characteristics must an activity possess to be considered an economic or
professional activity? Please be exhaustive.
3. In what country does a Bitcoin transaction take place? Which aspects
of a Bitcoin transaction are important in determining which jurisdiction
a transaction occurred in? Is it the computer that processed and
confirmed the transaction? Or is it something else?
4.a. Which financial obligations can be performed with Bitcoins in Estonia?
4.b. Where in Estonia can Bitcoins be exchanged for an official currency?
I look forward to your clarifications.
Best Regards,
Otto de Voogd
From: Otto de Voogd
To: Urmas Pai
Sent: 2014-02-21 14:30 +0200
Subject: Re: www.btc.ee Change of date and venue
Dear Mr Pai,
To my knowledge the only Estonian governmental institution to have
publicly made a statement regarding Bitcoins, is the Estonian Central bank:
"Esiteks on virtuaalraha skeemide näol tegemist valdkonnaga, mis on
siiani reguleerimata ja mille üle ei teosta järelevalvet ükski asutus."
We also know that Tavid has asked for information from several state
institutions:
"Tavid küsis rahandusministeeriumilt, finantsinspektsioonilt, Eesti
pangalt, politsei- ja piirivalveametilt ja maksu- ja tollimetilt, mis
Bitcoin on – kas virtuaalne raha, tooraine, teenus, finantsinstrument,
väärtpaber või e-raha; millised maksud rakenduvad selliste
instrumentidega kauplemisel. Lisaks tahtsid nad teada, kas ja kuidas on
selliste instrumentidega kauplemine reguleeritud, kes teostab
järelevalvet ning milliseid litsentse on vaja selliste instrumentidega
kauplemiseks."
However there has still been no answer provided to Tavid, or at least no
answer was made available to the public.
To move things forward, could you please take some time to answer my
earlier questions (see mail below) as well as provide me with an
indication of when we can expect that Tavid's questions will be answered
by those state institutions?
While I would really like to meet you and put the matter behind us, I
feel that it could be a waste of each other's time as long as some of
the basic questions have not yet been clarified.
Therefor I propose to schedule a meeting once we have sufficient
information.
Head vabariigi aastapäeva!
Otto de Voogd
On 2014-02-18 17:59, Otto de Voogd wrote:
> Dear Mr. Pai,
>
> Thank you for your answer.
>
> Unfortunately I was busy today and will be busy tomorrow with a
> training, which doesn't leave me much time to arrange anything (and as
> I am not at work I don't have access to my agenda right now), but
> hopefully by Thursday I'll get back to you with possible times for a
> meeting next week.
>
> Regarding your question about btc.ee, could you first clarify for me,
> on what legal basis you think that Estonia has jurisdiction over a
> server or a website that is not located in Estonia?
>
> I would also appreciate if you could provide me with the following
> information prior to our meeting:
>
> 1.a. Who decided that Bitcoin is a "service of alternative means of
> payment" rather than say an e-currency or a commodity? Is it your own
> opinion? Or is it the outcome of an analysis by an Estonian
> governmental institution?
>
> 1.b. If the latter, then please provide me with the reference, text
> and date of publication of that decision/analysis. If it's not public,
> why has this not been made public?
>
> 2. What are the characteristics that differentiates an economic or
> professional activity from a non-professional activity? What
> characteristics must an activity possess to be considered an economic
> or professional activity? Please be exhaustive.
>
> 3. In what country does a Bitcoin transaction take place? Which
> aspects of a Bitcoin transaction are important in determining which
> jurisdiction a transaction occurred in? Is it the computer that
> processed and confirmed the transaction? Or is it something else?
>
> 4.a. Which financial obligations can be performed with Bitcoins in
Estonia?
>
> 4.b. Where in Estonia can Bitcoins be exchanged for an official currency?
>
> I look forward to your clarifications.
>
> Best Regards,
> Otto de Voogd
From: Urmas Pai
To: Otto de Voogd
Date: Tue, 25 Feb 2014 17:58:27 +0200
Subject: www.btc.ee Change of date and venue
Dear Mr. De Voogd
Unfortunately we do not have an official statement from Estonian Central
Bank that says that trading bitcoin can not be handled as providing the
service of alternative means of payment, if you should have that kind of
statement, please forward it to us. You must understand that we can not
perform our supervision on bases of articles publicized in press.
Also we do not possess the correspondence between AS Tavid and different
state institutions as you indicated, therefore, again, we can not give
any comments on that.
We will public our opinion regarding the matter of bitcoins on our
website soon (www.politsei.ee/rahapesu
). Also the explanation of risk of
bitcoins being used for money laundering can be found there as well as
explanation why offering the service of selling and buying bitcoins on
internet can be defined as being the provider of services of
alternative means of payment according to Estonian Money Laundering and
Terrorist Financing Prevention Act (RahaPTS).
Nevertheless, please see answers to your questions:
1.a - Opinion of Estonian FIU (rahapesu andmebüroo) and the Ministry of
Finance (Rahandusministeerium)
1.b - In Estonia, the owner of the law (the Ministry of Finance in our
case) can give the interpretation of the law.
By the Constitution of the Republic of Estonia only courts can judge and
through that conclusively interprete the law.
2. - This is one thing we have to estimate during the supervision as
well as identify who is offering the service. As Estonian AML Law § 6 lg
2 p 4 states that a provider of services of alternative means of
payment is a person who in its economic or professional activities and
through a communications, transfer or clearing system buys, sells or
mediates funds of monetary value by which financial obligations can be
performed or which can be exchanged for an official currency, but who is
not a person specified in subsection (1) or a financial institution for
the purposes of the Credit Institutions Act.
That means that we have to estimate if economic or professional activity
is performed. As seen on www.btc.ee the selling and
buying of Bitcoins is offered on page and also a difference of selling
and buying prices can be seen. This refers to objective of making a
profit out of that kind of activity and according our estimation it's an
economic activity and it is offered in internet publicly for everybody.
3. Depends on circumstances, in case of www.btc.ee
we have first to identify the person who is offering the service behind
the webpage. Please be noted that after asking several times, we still
have not received any answer on that. If the service is provided by
Estonian resident on .ee domain and on webpage that can be read in two
languages and one of them is Estonian,according given information on
webpage the office for making transactions is situated at Rävala 8,
Tallinn -then by our means the service is provided in Estonia.
4. a - It can be used (accepted as payment instrument) for some traders.
4. b - It can be traded to official currency by using service providers
that are similar to www.btc.ee .
Again, please give us possible timespans for meeting.
Best Regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Urmas Pai
To: Otto de Voogd
Date: Wed, 5 Mar 2014 12:03:15 +0000
Subject: RE: www.btc.ee Change of date and venue
Dear Sir
We have still not received an answer from you about possible time of venue. Again we ask you to inform when is it possible for you to meet us.
Kind regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Urmas Pai
To: Otto de Voogd
Date: Mon, 10 Mar 2014 12:54:47 +0000
Subject: RE: <pealkirjata>
Dear Mr. De Voogd
Seems that we have already answerd to that question, please see our
reply dated 17.02.2014.
As reply to your question about threshold of 1000 EUR per calendar month
and identification , please see RahaPTS § 15 lg 8 and § 23 lg 1 - 2
respectively.
Kind regards
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Date: Wed, 12 Mar 2014 23:44:49 +0200
Subject: Re: www.btc.ee Change of date and venue
Dear Mr. Pai,
I hereby again ask you to specify all the criteria that make an activity
an economic or professional activity. Surely making a little profit on a
few transactions is not in itself sufficient to qualify, or else nearly
every trade between two private citizens would qualify. Surely these
criteria are not a secret and must be published somewhere, so I'd
appreciate it if you gave me the url of such an official publication.
Please note that according to the General Part of the Economic
Activities Code Act (which will enter into force as from July 1, 2014) §
3 (1) economic activity is any permanent activity which is pursued
independently to generate income and which is not prohibited pursuant to
law. My activities cannot be regarded as permanent independent and
income generation oriented.
I also asked where a Bitcoin transaction takes place, but still don't
have the answer. A Bitcoin transaction being the actual moving of
Bitcoins from one account to another. Where does it take place? Legally
speaking. If you are going to regulate Bitcoin transactions and/or
enforce Estonian legislation against me, you should have answers to such
questions.
I also asked where in Estonia I can convert Bitcoins into official
currency, again I don't have an answer. There are no places where such a
service is consistently and easily available to the general public in
Estonia. If you think otherwise, please give me a place and address
where one can sell Bitcoins in Estonia the same way that one can sell,
say, US dollars.
Furthermore the 2 or 3 places where Bitcoins can be used to pay does not
make it into something with which you can fulfill your financial
obligations.
In fact in Estonia, you can not really fulfill your financial
obligations with Bitcoins nor exchange them into official currency at
will, and certainly not at any Estonian financial institution.
There are probably more places in Estonia that would accept payment in
cigarettes or vodka then there are places that accept Bitcoin. It's also
certainly easier to exchange those items into official currency than it
is for Bitcoins. Yet I don't see cigarettes and vodka being treated as
alternative methods of payment in spite of being more fitting candidates.
It seems clear that this law does not apply neatly to Bitcoins at all.
Also it's worth noting that this law was never passed by the Riigikogu
with Bitcoins in mind, as the law predates Bitcoin.
Additionally, one should bare in mind that Bitcoins are not generally
being used to make payments, but rather as an investment instrument.
Much like stocks and bonds. People buy them in the hope of reselling
them later at a higher price. This is clearly not a characteristic of a
payment method, but rather of a commodity or financial asset.
I'd like to point out that the server that hosts the site is named
ps9296.dreamhost.com and is located in the United States of America. It
hosts many sites with different URLs with different top level domains,
that are aliases pointing to the server ps9296.dreamhost.com, i.e. that
is the real name of the server and not btc.ee. Contrarily to your
assertion the site btc.ee is actually in English, the main page opens in
English and not in Estonian. An Estonian version was created because I
am learning Estonian. I am saddened to see that learning Estonian is a
liability in the eyes of the Estonian police.
You might also be aware that an address published on a site is not an
indication of where the server is located. In fact none of the points
you mention prove that the server is located in Estonia. On the contrary
I can clearly prove that the server is not located in Estonia.
Physical location of the server is most certainly the only factor in
determining jurisdiction over a server. Or do you think that a site in
Russian on a server in Estonia should fall under Russian jurisdiction
merely for being in Russian? Let's go further and say it also hosted a
site with a .ru domain and was the official site for an opposition
movement located in Russia with an adress in Moscow? In the Estonian
view would the server then be under Russian jurisdiction in spite of it
physically being in Estonia? Or would it be under Estonian jurisdiction
based on the fact that it is physically located here?
In my view the Estonian police does not have jurisdiction over a server
that is not in Estonia, just like the Russian police does not have
jurisdiction over a server that is not in Russia but in Estonia. I also
refer you to the Estonian Public Prosecutor´s Office which issued an
opinion on 19.07.2006 (No. RP-2-3/06/1365) according to which the
Estonian Penal Code is not applicable to online gambling games.
Since you claim that anyone could go to btc.ee and exchange Bitcoins via
the site, you must surely have tried to do this yourself. I would be
curious to see the screenshots of how that process supposedly happened
on btc.ee, could you please send me copies of your evidence of how you
managed to trade Bitcoins via the site? Please also send evidence that
the Bitcoins bought or sold that way were transferred inside your
jurisdiction and not in another country.
In your e-mail dated Feb 13th, you asked me for copies of the ID's of
clients, stating this was compulsory by law, however your boss Aivar
Paul, went to the press claiming that you never made such a request. I
quote: "RAB ei ole nõudnud kõikide bitcoin-i ostjate ja müüjate
isikuandmete esitamist, [...]" (See:
https://www.kannatanuabi.ee/et/artiklid?article_id=112 ).
How come your boss publicly contradicts what you asked me?
Could it be because, contrarily to what you tried to make me believe,
even for a "service of alternative means of payment" the law does not
actually require that copies be made of the ID's of clients, but only
requires that in a very specific case, namely only "upon establishment
of a business relationship and entering into a transaction while being
present at the same place as the customer".
Fortunately we do actually have an official statement from the Estonian
Central Bank. I quoted it in my previous e-mail (in case you need a
reference:
http://www.eestipank.ee/press/artiklid-ja-intervjuud/mihkel-nommela-kommentaar-bitcoini-kohta).
This is not just some article in the press, it's an official statement
by an Estonian state institution. This is also the ONLY official
statement made by any Estonian state institution prior to February 13th
(the date that you first contacted me). The Estonian Central Bank stated
that Bitcoin transactions are unregulated and not supervised by any
institution.
I should not have to explain that something can not be unregulated and
regulated at the same time, and neither can something be unsupervised
and supervised at the same time.
This leaves us just two options, either the central bank made a false
statement to the public, or the central bank was not aware that Bitcoin
transactions are regulated in Estonia as a "service of alternative means
of payment".
Since I do not think that the Estonian Central Bank would make a false
statement to the public, only the last explanation is plausible, i.e.
they did not think that any regulation applied to Bitcoins, this
includes the "service of alternative means of payment" regulations, if
they did think these regulations applied, they would not have claimed it
was unregulated.
Furthermore the Estonian Central Bank classified Bitcoins as a virtual
currency. A term that to my knowledge does not appear in Estonian law.
I am sure you know that AS Tavid requested information about Bitcoin's
legal status, from several state institutions, including the police,
where you work. Your job also clearly includes Bitcoin related matters,
thus if anyone should know when a question related to Bitcoins will be
answered by the police, it should be you or your direct superiors. I am
sure you'd agree that the answers that will be provided to AS Tavid
would be relevant to us.
Therefore, I request again that you tell me when the Estonian police
will answer AS Tavid's questions and when the answer will be published?
Furthermore, let me note that in your e-mail dated feb 25th 2014, you
indicated that the Estonian Police had not yet publicly published their
opinion regarding Bitcoins. I can only conclude the Estonian Police's
interpretation of the law, as they would apply to Bitcoins, was kept
secret from the public until well after you contacted me.
Also, as I am sure you are aware, it is not actually for me to prove
that Bitcoins can not be regulated as a "service of alternative means of
payment", rather it is for you to prove that it actually is regulated as
such and that this fact was known to the general public (i.e published).
Yet to this date you have failed to provide me with any law, regulation,
interpretation or precedent that explicitly mentioned the regulation of
Bitcoin transactions and was published prior to you contacting me.
Therefore, I conclude that there is actually no legal basis to your demands.
Regards,
Otto de Voogd
From: Urmas Pai
To: Otto de Voogd
Date: Fri, 14 Mar 2014 16:12:23 +0200
Subject: RE: www.btc.ee Change of date and venue
Dear Mr. De Voogd
As I understand you are indicating that the selling and buying
transactions of bitcoins are made between two private persons in your
case, also you indicate that you have done at least few of those
transactions.
As you asked to specify the criteria that makes an activity an economic
activity, please see Estonian Commercial Code § 1 for the definition of
undertaking: /An undertaking is a natural person who offers goods or
services for charge in his or her own name where the sale of goods or
provision of services is his or her permanent activity, or a company
provided by law./
There is no threshold of turnover or profit currently stated in Estonian
legislation as the criteria for defining the business activity nor are
there any minimum time period stated for estimation if activity can be
viewed as permanent.
Your’re reffering to General Part of the Economic Activities Code Act
(which will enter into force as from July 1, 2014) § 3 lg 1:
/Economic activity is any permanent activity which is pursued
independently to generate income and which is not prohibited pursuant to
law/.
With that legal norm the legislator has given a definition to so far
legally undefined concept (määratlemata õigusmõiste) of “economic
activity”. Estonian Supreme Court has repeatedly stated to its
resolutions (case no 3-1-1-100-13 and 3-1-1-89-13) that the formulation
of the law has to be as univocal as possible, but this does not mean
that there is prohibition of the usage of undefined legal concepts.
Well, it is clear that the state supervision has to be performed
according to legislation in force, this well known principle is stated
in Estonian Basic Law § 3. Here is one source that helps you to
understand our situation and legal grounds while performing state
supervision in case of legally undefined concept:
http://www.pohiseadus.ee/ptk-1/pg-3/
Also Estonian Supreme Court has stated in case no 3-3-1-87-10 that in
case of legally undefined concept the legislator has desisted of giving
detailed instructions by delegating that to supervision authority, also
the context of the case must be observed.
In your case we have seen that transactions of selling and buying of
bitcoins is offered on website www.btc.ee . Also the
price (EUR) offered for buying is lower than the price offered for
selling (EUR), so it’s profit orientated activity and income can be
expected. Therefore we see that kind of activity as the activity of
undertaking.
In case of legally undefined concept of the term economic activity and
in process of estimation if that kind of activity is performed
permanently, we have to collect relevant information and data under the
rights given in Estonian Money Laundering and Terrorist Financing
Prevention Act § 37 lg 1 p 4 and § 48 and follow the purpose of Estonian
Money Laundering and Terrorist Financing Prevention Act - to prevent the
use of the financial system and economic space of the Republic of
Estonia for money laundering and terrorist financing.
About the place of conducting transactions. www.btc.ee advertises itself
as “Teie bitcoini-allikas Tallinnas”, and from subsection the
information of conducting the cash transactions can be found:
“Pangaülekandeid on võimalik teha pangapäeva jooksul ja
sularahatehinguid Teisipäeviti 18:00 kuni 19:00.” This information
together indicates to permanent activity that is conducted in Estonia.
The information, that the second language on website is in Estonian only
because you are learning Estonian, is new to us, also we would like to
clarify that learning Estonian is not a liability in the eyes of the
Estonian police.
The questions related with changing bitcoins into official currency in
Estonian credit or financial institutions are not relevant in our case
because Estonian Money Laundering and Terrorist Financing Prevention Act
§ 6 lg 4 does not state that it has to be done in Estonia. Though you
have a point that legislator has not defined or given the range of means
that can be used as trading object for offering the alternative means of
payment service.
Nevertheless, according to Estonian Money Laundering and Terrorist
Financing Prevention Act § 52 lg 1 p 5 the list of registrated
alternative means of payment service providers can be found here
(insert to field “Tegevusala” -“Alternatiivsed maksevahendite teenused”):
http://mtr.mkm.ee/default.aspx?s=otsireg
The physical location of the server where the www.btc.ee is hosted may
be really the key issue concerning the juristiction of supervision. For
example the service providers servers location is relevant in field of
taxation, also as you indicated, in the field of online gambling. In
our case we have to follow the purpose of Estonian Money Laundering and
Terrorist Financing Prevention Act and unfortunately it does not give
regulations about financial service providers who are offering financial
services through server that is physically located abroad. According to
your statement, server that is hosting www.btc.ee is located in United
States of America but webpage itself is registered with .ee domain by
Estonian resident, webpage is in Estonian, webpage is in both languages
(Estonian and English) indicates of being the source of bitcoins in
Tallinn, one can trade bitcoins vs cash in Tallinn, then according to
our estimation the service is still offered in Estonia and directed to
Estonian market.
According to General Part of the Civil Code Act § 16 /the place of
business of a person is the place where the permanent and continuous
economic or professional activity of the person is carried out/.
About copies of ID-s. Information we asked to see on venue and what we
usually do during on-site inspections is connected to obligation of
procedure of identification process. In my e-mail from 13.02.2014 I was
clearly indicating that we want to see the copies of ID-s of those
clients who have done transactions over 1000 EUR threshold in one
calendar month. So Mr. Aivar Paul has given correct information to press
that we have not asked to see the ID-s of all of your clients (only
those whom you have to identify). The obligation is stated in Estonian
Money Laundering and Terrorist Financing Prevention Act § 23 1 and 2,
describing how the identification should be carried out:
/(1) An obligated person shall identify a natural person and verify the
person on the basis of a document specified in subsection 2 (2) of the
Identity Documents Act or a valid travel document issued in a foreign
country or a driving license complying with the conditions provided in
subsection 4 (1) of the Identity Documents Act. In addition to an
identity document, the representative of a person participating in a
transaction shall submit a document in the required format, certifying
the right of representation. A person below 7 years of age may be
identified on the basis of a birth certificate specified in § 30 of the
Vital Statistics Registration Act./
/(2) A copy shall be made of the page of an identity document submitted
for identification which contains the personal data and a photograph. In
addition, upon identification and verification of the persons specified
in subsection (1), an obligated person shall register the following
personal data:/
/1) the name and the representative’s name;/
/2) the personal identification code or, upon absence of a personal
identification code, the date and place of birth;/
/3) the name and number of the document used upon identification and
verification of persons, and its date of issue and the name of the
agency which issued the document;/
/4) the name of the document used upon identification and verification
of the right of representation, and its date of issue and the name of
the issuer./
Abovementioned documents are one of those we are checking during on-site
control in order to convince ourselves that obligation of identification
is fulfilled.
Unfortunately I’m not authorized to give you the correspondence between
AS Tavid and Estonian Police and Border Guard Board, but we do agree
that all service providers should be treated equally. We can only
approve the behavior of AS Tavid for asking some information by sending
a request in field of action they were not certain about, before
starting to provide the service.
As you indicated to the official statement made by Estonian Central
Bank, we still do not see that they have stated that bitcoins are
something that cannot be used for providing the service of alternative
means of payment, on the opposite - they also think of bitcoins as a
product with high risk for money laundering and terrorism financing,
also they see it as a great challenge for law enforcement agencies (in
our opinion they see the possibility to change the bitcoins vs the
official currency and mentioned threats on that kind of activity). Even
bitcoin.org sees the need of the regulatory power /- However, it is
worth noting that Bitcoin will undoubtedly be subjected to similar
regulations that are already in place inside existing financial systems.
Bitcoin cannot be more anonymous than cash and it is not likely to
prevent criminal investigations from being conducted/
(https://bitcoin.org/en/faq#is-bitcoin-anonymous).
Our own opinion regarding the matter of trading bitcoins can now be
found from our webpage and for your information we have not kept our
opinion in secret – we just did not saw the need for composing something
like that earlier.
We disagree on your opinion that we have failed to provide you about the
information of any law, regulation, interpretation or precedent that
explicitly mentioned the regulation of Bitcoin transactions and was
published prior to contacting you.
It needs some clarification. First of all, we do not have the obligation
to give the published interpretation of the law nor do we have to public
our cases of supervision precedents. All Estonian laws can be found from
website www.riigiteataja.ee . Estonian Money
Laundering and Terrorist Financing Prevention Act has been in force from
28.01.2008.
Secondly, according to Response to Memoranda and Requests for
Explanations Act § 3 one could ask the interpretation (õigusalane
selgitus) of the law from the author of the law, in our case the
Estonian Ministry of Finance.
For summary, as we have not still received any information about
transactions, documents, as well as we do not still have received a
confirmation from you who is the person who made those bitcoin
transactions we have not been able to go on with our supervision.
For getting that information Estonian FIU will send you a precept as to
obligated person according to Money Laundering and Terrorist Financing
Prevention Act § 10 and § 48 lg 3. In percept you’ll see the
information we are requesting and also the time period for answering
will be given.
The precept is the administrative act according to Administrative
Procedure Act § 52 and according to Administrative Procedure Act Chapter
5 the procedure of challenging the proceedings is described if you
should consider it.
Best regards
[snip]
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]
_www.politsei.ee/rahapesu_
From: Otto de Voogd
To: Urmas Pai
Date: Wed, 19 Mar 2014 14:45:16 +0200
Subject: Question regarding private persons
Dear Mr. Pai,
Is it legal in Estonia for two private persons to exchange Bitcoins?
Are there any limitations, restrictions or obligations on either party in such an exchange?
If there are any limitations, restrictions or obligations, what are they?
Regards,
Otto de Voogd
From: Otto de Voogd
To: Urmas Pai
Date: Tue, 25 Mar 2014 13:43:23 +0200
Subject: Fwd: Question regarding private persons
Dear Mr. Pai,
I'd like to know if you are going to answer my question from March 19th?
See below.
If you will not answer, please let me know also.
Regards,
Otto de Voogd
From: Urmas Pai
To: Otto de Voogd
Subject: RE: Question regarding private persons
Date: Tue, 25 Mar 2014 12:34:43 +0000
Dear Mr. De Voogd
As seen from our e-mail dated 14.03.2014 - according to Response to Memoranda and Requests for Explanations Act § 3 you could ask the interpretation (õigusalane selgitus) of the law from the author of the law. We have answered to several of your e-mails regarding questions about Money Laundering and Terrorist Financing Prevention Act, yet not received any helpful answers to our requests. We have to explain that giving legal advice (õigusabi) is not actually our task while doing supervison over the activity of providers of services of alternative means of payment, is our task.
Therefore, we can not comment your questions about hypothetical situations (without knowing the full background of the situation) you have asked below and on e-mail 18.03.2014.
So, in purpose to go on with our supervision, we have already sent you a precept that should reach you soon by post (I also added the text of the precept to this e-mail). We have asked from you several times about the information concerning details and documentation of transactions of bitcoins, and basically have not received any useful answers about the activity of selling/buying bitcoin transactions that is offered on www.btc.ee.
We are waiting for the information asked in precept in order to continue our supervision.
Regards,
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 123 840
tel. direct +372 6 123 859
fax +372 6 123 845
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Date: Tue, 25 Mar 2014 15:11:33 +0200
Subject: Re: Question regarding private persons
Dear Mr. Pai,
I am sorry, but it's not a hypothetical situation - it's the situation
we are talking about. And you are basically refusing to explain how you
interpret the law that you are trying to apply to me and refusing to
clarify to what extent trading is freely permitted (if at all).
You also stated that you approved of Tavid asking the police advice on
how the law is interpreted. But apparently you don't approve when I do it.
I've already stated several times that my activities did not make me an
obligated person. With that I've answered your question.
Regards,
Otto
From: Otto de Voogd
To: Urmas Pai
Date: Wed, 26 Mar 2014 10:14:24 +0200
Subject: Fwd: Re: Question regarding private persons
Dear Mr. Pai,
I expect that you forward my request for explanation submitted to you on March 19th (see below), in accordance with the Response to Memoranda and Requests for Explanations Act § 5 (3):
"(3) If the addressee finds that it is not within the competence thereof to consider any of the opinions or proposals presented in a memorandum or to respond to a memorandum or to provide the information or explanation requested by a request for explanation, the addressee shall forward, without undue delay but not later than within five working days after the date of registration of the memorandum or request for explanation, the memorandum or request for explanation to the agency or body competent to respond, and shall give the person notice thereof pursuant to the procedure provided for in subsection "
I note that more than 5 days have already past since I sent you my request.
Regards,
Otto de Voogd
From: Urmas Pai
To: Otto de Voogd
Date: Wed, 26 Mar 2014 11:07:35 +0200
Subject: RE: Re: Question regarding private persons
Dear Mr. De Voogd
As I see the matter, those questions does not refer to any specific law or paragraph, so it is not clear to us whom to forward those questions (which specific law and paragraph we are talking about). Please reform your questions so we could see the exact law and paragraph you do not understand and therefore need the interpretation and we gladly apply the Response to Memoranda and Requests for Explanations Act § 5 (3).
Please do not confound the obligation sentenced in Response to Memoranda and Requests for Explanations Act (õigusalaste selgituste andmine) § 3 with service of providing the legal advice (õigusabi andmine). Legal advice is basically the situation when legal analysis is given according to specific circumstances occured and this is not a task for us. Also we are not sure if your questions will be answered in English by other institutions so you might consider the need of translating them to Estonian.
Also we will explain why we can not handle your questions as unhypotetical questions and consider them as not connected to our case:
We have not seen any information from you about the transactions - so we do not know if those transactions are made between two private persons or not (maybe you have a company), also we do not know who are the counterparts of transactions in order to define their obligations. After receiving the answer to the precept from you we should have this information and we can continue with supervision.
What we can say and we have also stated it earlier - activity of buying/selling bitcoins in order to make profit is by our means the service of providing the alternative means of payment and Money Laundering and Terrorist Financing Prevention Act shall be followed.
Best regards,
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Date: Wed, 26 Mar 2014 11:23:12 +0200
Subject: Re: Question regarding private persons
Dear Mr. Pai,
There are no laws mentioning Bitcoins or anything related, yet you have
interpreted existing laws in ways that apply according to you. I can not
guess which laws apply, when this is not written anywhere.
I am asking you to clarify YOUR interpretation of the law.
> What we can say and we have also stated it earlier - activity of
> buying/selling bitcoins in order to make profit is by our means the
> service of providing the alternative means of payment and Money
> Laundering and Terrorist Financing Prevention Act shall be followed.
Please explain the above sentence.
Does this mean that any Bitcoin transaction between two private
individuals where at least one of them makes a profit is subject to AML law?
Regards,
Otto
From: Urmas Pai
To: Otto de Voogd
Date: Wed, 26 Mar 2014 13:00:31 +0200
Subject: RE: Question regarding private persons
Dear Mr. De Voogd
As we have already answered earlier - the legislator have not seen the need to give the exhaustive list of the objects that can be used for alternative payment service, only the differentia (tunnused) is stated, for example - the WMZ-s are also not directly mentioned in law. Through all our exchange of e-mails we have given our explanation why we see that bitcoins can be used as the object for alternative payment method, also done it in English with strong resemblance to providing legal assistance. Not any subject has had such kind of privilege.
If you should want to see our opinion on interpretation of the law, please see:
http://www.politsei.ee/et/uudised/uudis.dot?id=314939
And answering your question - not any bitcoin transaction falls under our law, law has to be applied only when transaction is done while providing the service of alternative means of payment (or in case of other reason of being the subject of the law - for example like being the trader and doing cash transactions over 15 000 EUR).
Regards,
Urmas Pai
Estonian Financial Intelligence Unit
Tööstuse Street 52, 10416 Tallinn, Estonia
tel. secretary +372 6 [snip]
tel. direct +372 6 [snip]
fax +372 6 [snip]
[snip]@politsei.ee
www.politsei.ee/rahapesu
From: Otto de Voogd
To: Urmas Pai
Date: Wed, 26 Mar 2014 13:42:15 +0200
Subject: Re: Question regarding private persons
Dear Mr. Pai,
You have said a lot of stuff, but generally avoid to answer my questions
directly, leaving *a lot* of uncertainty.
You brought up the criteria of making a profit on a transaction as being
indicative of there being a service that falls under AML supervision.
I did not ask you about *any* Bitcoin transaction. I asked you about
Bitcoin transactions between two private individuals where profit is
being made by at least one party.
This reflects the criteria you mention, and I am trying to understand if
I understood you correctly.
This has not been answered clearly anywhere that I can find, including
in the document you linked to, nor in any of your e-mails.
You stated that the Police approved of Tavid asking before engaging in
any activity.
So I now ask, if someone (for instance me) wants to do a transaction in
the near future, as a private citizen with another private citizen, not
via any site, and either I or the other person makes a profit. Does this
then fall under AML law?
Your statement suggests that it does, but I want to know it for sure.
Regards,
Otto
ps. I have no idea what WMZ means.
