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 how salaries are paid and bills settled in the northern metropolis, despite the banks reopening since Iraqi forces seized it back last year from 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 authorised even simple transfers.

So Mosul banks, exchange offices, and money transfer companies have watched helplessly as more rudimentary methods fill the gap.

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

"I put the money in an envelope that I then tape underneath my seat," he told AFP.

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

"Despite the risks, businessmen entrust this much money to me because they don't 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 came back under Iraqi government control in July 2017 after a months-long assault that left its infrastructure devastated, but IS cells appear to remain active.

Security forces last month arrested nearly a dozen members of an IS financial network based 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 cheques.

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

That decision appears to have hurt business owners trying to rekindle economic activity in Mosul, a centuries-old trade hub with access to Iraqi, Turkish and Syrian markets.

Among them is Abdullah Basman, a Mosul native who sells computer parts brought in from other areas of Iraq and from Dubai.

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

"The banks in Mosul are just buildings. Nothing more," said Basman, 27.

For company employee Abu Akram, the ban on bank transfers means he often goes months without a salary, which is issued from his firm's headquarters in Baghdad.

The 35-year-old relies on friends of relatives who traverse the dusty 400 kilometres (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 other than me. With a taxi, there's a risk of an accident or of theft," Abu Akram told AFP.

- Banks quiet, markets buzz -

The reach of banks in Mosul appear to be par for the course in Iraq, where only one in ten people has an account, according to the World Bank.

"The banking system in Iraq is underdeveloped, dominated by inefficient state-owned banks. Some of them are believed to be capital deficient and extend little credit to the private sector," 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 rapidly brought back 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 relatives 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 centres, and open markets are now buzzing with activity.

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