ERBIL, Kurdistan Region—Millions of dollars pass through the Erbil currency exchange market every day, but the lucrative business in Iraqi Kurdistan's predominantly cash economy operates with little or no regulation.
Walking through the Shekhallah Market, the cacophony of automatic bill counters sifting through Euros, Dinars, Dollars or Pounds nearly drowns out the steady chatter of merchants selling watches, vegetables or goods in the streets before the bustling cash sector.
There seems to be no banking officials or government bodies watching over the cash exchange, where hundreds and thousands of dollars and other foreign currencies are transferred or exchanged every minute.
Kurdish and foreign businessmen from neighboring countries walk into cash transfer offices with stacks of bills, and walk out with receipts in hand. Little stands are filled with Iraqi banknotes, as shop owners wait patiently for the next customer.
Asked how the market was regulated, most merchants and clerks were too busy to talk.
But Saadi Ali, a currency changer for 20 years, said as he sifted through bills, "I pay no taxes to the government at all."
Like many of his colleagues on the street of small currency changers, Ali said that on any given day he exchanges the equivalent of thousands of dollars, all tax free and untouched by the government.
And, he says, there are no start-up costs besides access to a large amount of Iraqi Dinar notes to exchange for foreign currency.
In the autonomous Kurdish enclave, the only semblance of governed control seems to be set forth by the Central Bank of Iraq (CBI) and the currency conversion rates, which most of the merchants use to gauge exchange rates.
But even this relationship seems to be governed on shaky grounds.
Last year Hussein Muhammad, head of the Currency Trading Council, accused the CBI of flooding the market with $265 million, which devalued the US currency from 1.28 to 1.23, causing large losses among many currency exchangers.
Unlike, Ali, the larger cash exchanges, and particularly cash transfer businesses have to get a license from the interior ministry.
"I pay tax to the government yearly, it is almost 280,000 Iraqi Dinar," said Wrya Ali, the owner of Euro cash exchange. That is about $222 a year, an insignificant amount compared to the profits the exchangers admit to making.
Merchants involved both in exchange or money transfers said they can make thousands of dollars a month, but refused to give a figure, saying it was because profits could vary greatly from one month to the other, depending on several factors.
The bigger merchants have been known to sometimes make even hundreds of thousands of dollars in a single day, according to some of the money exchangers.
The predominant forms of cash exchanged or traded, seems to be U.S. Dollar and Euros.
Although the government does not regulate the money changers, it does ensure their security – testifying to their key role in this predominantly cash-only economy.
Security guards disguised as civilians watch over the cash area for any suspicious activity, and robberies are few and far between.
