Judgment of the Provincial Court of Asturias of 6 February 2015

The plaintiff, the Company MEETPAYS, S.L., seeks in these proceedings from Caja Laboral Popular Cooperativa de Crédito performance of the merchant agreement with the Visa and MasterCard card systems, which included the installation of a virtual point-of-sale terminal (POS) and that both parties had signed on December 30, 2013. The defendant, among other defenses, objected that this contract was never effective because the POS had not been activated because it could not guarantee the due diligence measures provided for in Law 10/10, of April 28, on the prevention of money laundering and the financing of terrorism.

The first-instance judgment fully accepted the claim. Caja Laboral Popular now focuses the appeal on the argument that has been exposed, which will be analyzed below. The alleged infringement of arts must be rejected. 400 and 286 L.E.C. denounced by the appellee, who maintains that this is a new issue, not alleged either in the response brief or in the previous hearing. It is enough to read legal ground III of the defence, in which express reference is made to the aforementioned Law and, more specifically, to the requirements imposed by its art. 7, to show how unfounded this allegation by MEETPAYS, S.L.

The decision that must be made on the controversial issue must be based on the special purpose for which the plaintiff was interested in contracting that virtual POS. Although the contract surprisingly states that its main activity is «fast food», what was actually intended is the use of that terminal for the acquisition of virtual currency, known as «bitcoin», through credit cards. No reference was made to this objective in the aforementioned contract. However, the person who signed it for the defendant, Mr. Sabino, admitted at the trial that he had verbal information from the plaintiff’s representative, although the subsequent emails that Caja Laboral sent to the plaintiff allude to a divergence between the activity they had declared – providing the software for the own acquisition of bitcoins – and the service for which the terminal was intended to be used, referring to the purchase or marketing of bitcoins.

In response to this specific matter that was going to be the subject of activity, a few days later the central services of the defendant bank raised serious objections to the activation of the service (especially emails of January 16 and 21, 2014), since it could «be used to make payments in bitcoins throughout the world anonymously and free of charge and from the computer or from the mobile phone», being «impossible to verify the legitimacy and origin of the funds» in a «high-risk» activity, with the competent authorities concerned about this new currency», which could be used for «the laundering of money from drug trafficking and others». Finally, on January 24, 2014, they informed the plaintiff of the decision to terminate the contract. It is clear that on the 9th of the same month, Caja Laboral had sent the plaintiff a POS service commission in the amount of EUR 10, which it attributes to a system error, as it seems since it did not even manage to issue the installation fees provided for in the contract which, logically, should have been prior to that.

This Chamber shares the assessments of the trial judge regarding the binding force of freely entered into contracts and that their validity and compliance cannot be left to the discretion of one of the parties (arts. 1089, 1091 and 1256 C.C.). And it also endorses the considerations that its fulfillment was not conditional on compliance with the aspects that the bank later denounced, as well as those referring to the fact that the contract had already been concluded when its central services showed their misgivings about the plaintiff’s activity. Finally, insisting on this last idea, the references made in the appeal document to the effect that the effectiveness of the contract was subject to the decision made by said central services must be rejected, since nothing is said about this in the contract.

Now, it is true that the activities that MEETPAYS has as its corporate purpose refer to computer consulting, software development and the sale of computer articles and products. And one thing is to facilitate or sell software for the acquisition of bitcoins and another is the direct marketing of bitcoins, which is what they intend to do, according to what their worker, Mr. Jose Daniel, admitted, without it being stated that the bank had prior knowledge that this was going to be precisely the real activity that the plaintiff wanted to carry out through the virtual POS.

On the other hand, the aforementioned Law 10/10, of April 28, imposes on financial entities special control and attention to any risk of money laundering that may arise from products or operations conducive to anonymity, or from the development of new technologies (art. 16). It is obvious that to avoid anonymity it is necessary to verify both the identity of the acquirer and the legitimacy and authenticity of the funds, which these central services and, especially, the director of regulatory compliance, Mr. Juan Carlos, insisted on, both in the emails after the contract was concluded and when testifying as a witness.

That Law, which transposes Directive 2005/60, has a preventive purpose, in order to avoid risky activities that may affect money laundering or the financing of terrorism. As Article 1 states, what are established are «prevention obligations», indicating a series of measures that must be adopted in order to allow certain operations. These measures can be normal (those provided for in arts 3 et seq.), basically referring to the verification of the identity of the parties involved through reliable documents, simplified (arts 9 et seq.) and enhanced (arts. 11 et seq.). The latter are considered for high-risk cases, among which are foreign currency exchange, non-face-to-face transactions and those conducive to anonymity and new technological developments.

In the latter case are those analyzed here: they are non-face-to-face activities since they are operated through virtual sales terminals, conducive to anonymity and referring to a currency that is also virtual, difficult to control. This is a risky product, which may be related to money laundering, as the witness Mr. Juan Carlos explained in detail, citing the conclusions of the Financial Action Task Force (FATF), whose recommendations are cited in the preamble of Law 10/10.

Special risk that also emerges from other data, such as the statement of Mr. Jose Daniel, who admitted that they are the only ones in the world who operate – or try to – acquiring bitcoins through credit cards since the normal operation is to do so by bank transfer; or that they also requested to arrange this activity with other banking entities (he cited two) and they did not allow it either. Even in the Order issued by Section 6 of this Court, dated June 9, 2014, although the interim measure requested by Meetpays is ratified with respect to another bank, it is admitted (third basis) that «the high number of operations denied or directly considered fraudulent is striking.»

The art. 7.3 of the same Law adds that when the obliged entities – in this case the financial institution – cannot apply the diligence measures provided for in the Law, they will not establish business relationships or carry out transactions, and must terminate the business relationship. It is an imperative legal mandate, which is imposed on the will of the parties embodied in a contract, to be taken in prevention, that is, before the observed risk translates into the activity that is being avoided.

In short, in the face of a particularly sensitive matter, the legislator requires that special controls be taken and prohibits business relationships when they cannot be duly fulfilled or there are indications that the operation may encourage criminal activities, even if these are beyond the control of the contracting parties. Mr. Jose Daniel at trial explained the various filters they establish to identify the purchasers. But as the trial judge rightly points out, the origin of the funds is no more obscure than any purchase over the Internet using a credit card. What is not taken into account is that in this case the object of the sale is the repeated bitcoins, the special risk of which has already been discussed.

On the contrary, nothing has been justified regarding the observance of other more specific enhanced measures such as those contemplated in art. 12 for non-face-to-face operations and, above all, those inherent to this monetary operation. If we add to this that it has not been proven that the banking entity knew exactly what activity the virtual POS was intended to be used for, it must be concluded, given what was decided at the instance, that art. 7.3 of Law 10/10 empowered the defendant to cancel or terminate the contract, as a precaution due to the doubts it raised about whether the full identification requirements required by that regulation could be met.

Although the above translates into the total dismissal of the claim, it is not appropriate to expressly impose the costs incurred in the first instance. At this point, the contradictory conduct of the defendant must be assessed, which, although it is not now obliged to remain in a passive situation, did act with certain negligence or haste, by signing the contract before carrying out the appropriate checks, as its central services later did. The doubts that this entails, as well as those inherent to the activity itself that wanted to be carried out, advise moving away from the rule that costs follow the event in this matter as permitted by art. 394 LEC. Without it, when the appeal is accepted, it is not appropriate to make an express order as to the costs of this appeal (art. 398 L.E.C).

For the above reasons, the Court dictates the following: