Financial Crime Schemes come and go in popularity. But some never go away and a scheme in Abu Dhabi demonstrates the persistence of an old credit card scheme.

Let's set the scene: a cash advance on a credit card often incurs charges for the purchaser and interest begins to run immediately. But a purchase of goods or services does not incur charges for the purchaser and there is an interest-free period. That's why "cash-back" schemes are so popular in supermarkets. Such schemes also benefit the supermarket because if the customer takes cash, the supermarket's cash-handling fees from banks, etc. are reduced. For smaller shops, it means that less cash is left on the premises overnight. The result is that there is a long established and completely legal cash-back system.

On more shaky ground is the system of refunds. Historically, where goods were sold and returned, refunds could be made in cash. It was a very common wheeze until credit card companies spotted the opportunity for fraud and money laundering and inserted conditions in their merchants' agreement that refunds must be made to the same card that had been used for payment. So the payment in cash was unlawful but it was not illegal.

Now let's take that one stage further: let's assume that there are no goods. And let's assume that the company has no spare cash. Let's get an organised group with spare cash needing a way to "unliquidate" it.

But the company has a merchant's account with credit card companies and has a bank account.

The group finds people and offers them cash in return for spending money with the company, making it plain that those people will not lose any money but they won't get any goods. The gang might even pay a premium or offer something that looks like a pay-day-loan ("we'll give you the cash now, you pay your credit card company later"). The group, which the court found was "organised" didn't "sell" goods: it operated as a travel agent.

Here's the really clever thing: until the customer runs out of available balance on his credit card, he can keep using the scheme and even then all he needs to do is keep up his minimum payments - while using the same scheme on another card.

Sometimes, the group would pay off credit card debt and interest so giving the customer breathing space on his card payments.

Many people will have seen this as a service like buy-now, pay-later and a far cheaper way of getting fast cash than using a loan shark - and without someone coming round to paint their house red or smash their legs.

So, no one is defrauded.

But there is a highly effective money laundering scheme. The group hands off its cash and puts payments from a credit card company (almost by definition money to which suspicion does not attach) into its bank account.

The 13 unnamed individuals, all Indian nationals, convicted in Abu Dhabi were, in our example, the group. This was not a small scheme: it allowed the Indians to launder Dh510 million - that's 11,142,158.89, according to XE.com. They didn't pay tax on the moneys received by the company.

How was the scheme identified? They were greedy. Their companies showed rapid increases in income that the authorities realised was an impossible rate of growth. And their personal bank accounts, into which funds were transferred, showed transaction patterns that were unusual.

So, they were tripped up by the most basic KYC / transaction and risk analysis. Nothing clever, nothing sophisticated. It's exactly what banks, etc. should have been doing for decades.

"Four defendants were sentenced to jail terms ranging from 5 to 10 years, followed by deportation. They were also ordered to pay fines ranging from Dh5 million to Dh10 million. Companies involved in the crime were each fined Dh10 million," reports the newspaper.

The fact that a travel agent was used indicates that the scheme operated within a mobile population and that, in turn, suggests an intra-community activity with the entire scheme involving Indians, as both customer and supplier and that, in turn, means that, without outside information, the scheme may never have come to light.

1 AED = 0.218371 GBP