Source: http://btc.ee/conv/20140213.html
Timestamp: 2019-04-25 17:55:17+00:00

Document:
2014-Feb: E-mail conversation with Urmas Pai of the Estonian Financial Intelligence unit. Layout edited for clarity.
The boss of Urmas Pai and head of the Estonian Financial Intelligence Unit is Aivar Paul.
This conversation with Urmas Pai and the actions taken by the police are the root cause of why I decided to leave Estonia.
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.
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.
The link in the e-mail below is to an article where Kuno Rääk, CEO of Tavid - Estonia's biggest currency exchange operator, asks the state to provide clarity: "Enne on väga keeruline hakata sellega tegelema, kui pole selgust majas,» selgitas Rääk." The article was publish on January 23rd 2014, a mere 3 weeks before the Estonian police initiated hostilities against me.
The article is good evidence that no-one knew what Bitcoins were legally classified as in the former Soviet republic.
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?
Next we see that they want to hold a "state supervision" and that this needs to be done in Estonian. Also translation if needed will be at my expense. Since it's basically the police wanting to question me, I think this is a human rights violation right there. European Human Rights law states that each person is entitled to procedures in a language he or she understands.
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.
(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.
(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.
(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.
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?
Here Urmas Pai again states that it's a state supervision and assumes that the "entity" is an obligated person under the law. Later in court Mr. Pai and his lawyer, while trying to appear to be reasonable, claimed that the precept (which comes later) was to determine if I am an obligated person. No such reasonable consideration appears in this e-mail.
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.
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.
Thursday Feb 20th at 13:00.
Please let me know if this time is also suitable for you.
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.
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).
The following e-mail made me decide to stop any Bitcoin related activity in Estonia. Urmas Pai is threatening me with 3 years in prison and a 32,000 Euro fine. From this point on it's more than clear that they seek information from me with the purpose of using it against me in order to either fine me or give me a prison sentence.
From this point on I believe that I do not have any obligation to cooperate with an investigation against myself. At least I would not if the East European country lived up to the Western-style democratic principles it claims to want to espouse, but unfortunately old Soviet habits appear to die hard. The appeals court later ruled that I must cooperate with this investigation against myself.
In any case this is one of the main human rights violation complaints that I now have against Estonia.
Also now they want "Copies of ID-s of clients", without any restrictions.
1000 Euro per month threshold that you mentioned?
any reference to a 1000 EUR threshold in the law.
"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.
Due to circumstances I will not be able to attend on Thursday.
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.
server or a website that is not located in Estonia?
has this not been made public?
professional activity? Please be exhaustive.
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.
siiani reguleerimata ja mille üle ei teosta järelevalvet ükski asutus."
answer was made available to the public.
the basic questions have not yet been clarified.
> server or a website that is not located in Estonia?
> why has this not been made public?
> or professional activity? Please be exhaustive.
> processed and confirmed the transaction? Or is it something else?
> 4.b. Where in Estonia can Bitcoins be exchanged for an official currency?
> I look forward to your clarifications.
Urmas Pai writes: "We will public our opinion regarding the matter of bitcoins on our website soon." In other words their opinion was still not published and up to this date no-one could know how the law was interpreted in regards to Bitcoin, except if you were so unlucky to be singled out by them as I was.
perform our supervision on bases of articles publicized in press.
Terrorist Financing Prevention Act (RahaPTS).
case) can give the interpretation of the law.
through that conclusively interprete the law.
the purposes of the Credit Institutions Act.
economic activity and it is offered in internet publicly for everybody.
Tallinn -then by our means the service is provided in Estonia.
4. a - It can be used (accepted as payment instrument) for some traders.
that are similar to www.btc.ee .
Again, please give us possible timespans for meeting.
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.
appreciate it if you gave me the url of such an official publication.
will, and certainly not at any Estonian financial institution.
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.
with Bitcoins in mind, as the law predates Bitcoin.
being used to make payments, but rather as an investment instrument.
payment method, but rather of a commodity or financial asset.
liability in the eyes of the Estonian police.
I can clearly prove that the server is not located in Estonia.
based on the fact that it is physically located here?
Estonian Penal Code is not applicable to online gambling games.
jurisdiction and not in another country.
How come your boss publicly contradicts what you asked me?
present at the same place as the customer".
and supervised at the same time.
statement to the public, only the last explanation is plausible, i.e.
currency. A term that to my knowledge does not appear in Estonian law.
would be relevant to us.
will answer AS Tavid's questions and when the answer will be published?
secret from the public until well after you contacted me.
such and that this fact was known to the general public (i.e published).
Bitcoin transactions and was published prior to you contacting me.
Therefore, I conclude that there is actually no legal basis to your demands.
that there is prohibition of the usage of undefined legal concepts.
the context of the case must be observed.
Estonia for money laundering and terrorist financing.
together indicates to permanent activity that is conducted in Estonia.
economic or professional activity of the person is carried out/.
starting to provide the service.
regulations that are already in place inside existing financial systems.
published prior to contacting you.
transactions we have not been able to go on with our supervision.
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?
I'd like to know if you are going to answer my question from March 19th?
If you will not answer, please let me know also.
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.
clarify to what extent trading is freely permitted (if at all).
how the law is interpreted. But apparently you don't approve when I do it.
obligated person. With that I've answered your question.
"(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.
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.
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.
guess which laws apply, when this is not written anywhere.
I am asking you to clarify YOUR interpretation of the law.
> Laundering and Terrorist Financing Prevention Act shall be followed.
Please explain the above sentence.
individuals where at least one of them makes a profit is subject to AML law?
Apparently I have to be thankful for the privileged treatment I got. What a privilege to be singled out for the purpose of setting an example and testing the law!
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.
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).
directly, leaving *a lot* of uncertainty.
indicative of there being a service that falls under AML supervision.
being made by at least one party.
in the document you linked to, nor in any of your e-mails.
then fall under AML law?
Your statement suggests that it does, but I want to know it for sure.
ps. I have no idea what WMZ means.
And thus started the beginning of the end of my life in Estonia.

References: § 37
 § 3
 § 47
 § 9
 § 9
 § 9
 § 15
 § 23
 § 3
 § 5
 § 3