Money moves again in Iraq's Mosul, but not via banks

Mosul, Iraq: Since jihadists were ousted from mosul last year, taxi driver Abu Aref has ferried more than just people into Iraq's second city: he regularly smuggles envelopes stuffed with cash.

This is the case in the northern metropolis, despite the banks reopening since Iraqi forces in the Islamic State group after three years of jihadist rule.

Iraqi authorities, fearing that free flows of money could help finance an IS comeback, have not authorized even simple transfers.

So Mosul banks, exchange offices, and money transfer companies have watched as they are more easily available.

Abu Aref said he typically carries anywhere between $ 10,000 ($ 8,800) to $ 50,000 at a time in his cab.

"I can not say that," he told AFP.

The journey can be risky. One of his colleagues was a victim of a highway robbery along the 200-kilometer (120-mile) road between Mosul and Baiji, further south.

"Despite the risks, businessmen want this much money because they do not have another choice," the 35 year-old said.

IS swept into Mosul in 2014, seizing several hundred million dollars from a branch of Iraq's central bank and other financial institutions.

Mosul cam back under Iraqi government control in July 2017 after a month-long assault that left its infrastructure devastated, but IS cells appear to remain active.

Security forces in Iraq, according to a US-led coalition against the jihadists in Iraq and Syria.

The central bank has remained wary of resuming operations in Mosul, saying it wants to know "where this money comes from and where it's going".

– To Baghdad and Beyond – Around 20 Private and State-Owned Banks have reopened in Mosul, allowing residents to open an account, deposit and withdraw money, and issue checks.

But the central bank has not budged on its transfers to and from the city.

Mosul, a centuries-old trade hub with access to Iraqi, Turkish and Syrian markets.

Among them is Abdullah Basman, a native of Iraq and from Dubai.

To pay suppliers, he hands over the costs of cash to a driver he trusts, who rushes the money to Baghdad and wires to other Iraqi cities or internationally to pay the shop bills.

"The banks in Mosul are just buildings," said Basman, 27.

For company employee Abu Akram, he has a salary, which is issued from his firm headquarters in Baghdad.

The 35-year-old Relies on friends of travelers who crosses the dusty 400 kilometers (250 miles) south to Baghdad or travel to nearby Iraqi Kurdistan to retrieve his cash.

But there are hiccups.

"Sometimes, my company refuses to give my salary to someone else with a taxi," said Abu Akram told AFP.

– Banks quiet, markets buzz – The reach of the banks in Mosul appear to be for the race in Iraq, according to the World Bank.

"The banking system in Iraq is underdeveloped, dominated by inefficient state-owned banks," The multilateral lender wrote in a recent report.

"Private banks are small and they are mostly active in currency exchanges and wire transfers."

Despite the challenges, Iraqi economist Rafea Ahmed says multiple businesses and investors have already resumed operations in Mosul.

"They're moving their money in their own ways," he said.

Secret transfers even continued during IS's rule over the city, with family members living in Baghdad finding ways to smuggle money to relative stuck inside Mosul.

Some of that cash, says Ahmed, has contributed to the revival already visible in Mosul.

Even if the banks sit empty, the restaurants, commercial centers, and open markets are buzzing with activity.