In a significant move to combat the financial backbone of Yemen’s Houthi rebels, the U.S. Department of the Treasury has recently imposed sanctions on the Yemen and Kuwait Bank for Trade and Investment (YSC), located in the conflict-torn city of Sanaa. Announced on Friday, January 17, by the Office of Foreign Assets Control (OFAC), these sanctions underscore a broader U.S. strategy aimed at severing the economic lifelines of the Houthi insurgency, which has been a destabilizing force in the region.
The decision to sanction YSC stems from its role in providing monetary support to the Houthis, a group designated by the U.S. as a terrorist organization since February 2024. This action is not just about cutting off funds for military operations; it’s a clear message against the exploitation of financial systems for insurgent activities. Bradley Smith, the Deputy Secretary of the Treasury for Terrorism and Financial Intelligence, highlighted the necessity of this action, stating, “The Houthis rely on a few key financial institutions like the Yemen and Kuwait Bank to access the international financial system and fund their destabilizing attacks in the region.”
Yemen Kuwait Bank has been accused of aiding the Houthis in money laundering, establishing front companies, and facilitating the transfer of funds, including those from the sale of Iranian oil, directly to Houthi allies, such as Hezbollah in Lebanon. This network has been pivotal in sustaining Houthi military operations, particularly their aggressive attacks on shipping in the Red Sea, which have significantly disrupted global trade routes since November 2023. These attacks have led to ships avoiding the Suez Canal, instead opting for the longer, costlier route around Africa, thereby inflating shipping costs and stoking inflation fears worldwide.
These sanctions build upon previous measures by the U.S. Treasury, which have targeted Houthi-associated money exchange houses and broader international finance networks involved in channeling illicit proceeds from Iranian petroleum sales to the Houthis. The U.S. has been meticulous in its approach, also designating individuals and vessels involved in these transactions under various executive orders, aiming to disrupt the financial support mechanisms for both the Houthis and their Iranian backers, particularly the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).
The rationale behind these sanctions extends beyond immediate financial constraints; it’s about ensuring the integrity of Yemen’s banking sector amidst its political turmoil. By isolating these financial channels, the U.S. seeks to support the internationally recognized Yemeni government in maintaining control over its financial institutions, preventing them from becoming tools of insurgent influence.
This latest sanction is another step in the complex journey towards peace in Yemen, where over half the population faces acute food shortages, described by the United Nations as the world’s worst humanitarian crisis. The U.S. commitment to this cause is also evident through its coordinated actions with Gulf partners and its pressure on the Houthis to end their campaign of violence and engage in peace talks.
As the situation in Yemen continues to evolve, with the Houthis maintaining control over significant parts of the country, including Sanaa, and launching attacks not only at sea but also towards neighbors like Israel, these financial sanctions represent a critical front in the multifaceted approach to restoring stability and fostering a future where legitimate governance can flourish without the shadow of insurgent funding.
