New Sanctions Against the Houthis Take Aim at the Terrorist Group’s Banking Sector 

The Trump administration is following through on the promise of a whole-of-government approach to stopping Houthi terrorism. While U.S. Central Command forces have been continuously striking the group since mid-March, the Treasury Department has been identifying and disrupting the Houthis’ financial networks. 

Treasury sanctioned the International Bank of Yemen (IBY) on April 17, noting that the bank “is controlled by the Iran-backed Houthis and provides the terrorist group access to the bank’s Society for Worldwide Interbank Financial Telecommunications (SWIFT) network.” The IBY’s access to the SWIFT network facilitates the Houthis’ international transactions, including oil purchases. The bank also aids Houthi attempts to evade sanctions, according to Treasury. Treasury also sanctioned the chairman of the IBY board, along with the bank’s general executive manager and deputy executive manager. 

The Trump Administration Takes a More Aggressive Approach to Houthi Sanctions 

Since the Trump administration’s March 4 designation of the Houthis as a foreign terrorist organization (FTO), the Treasury Department has issued three rounds of sanctions targeting Houthi leaders, its weapons procurement network, and its financial system. Treasury also levied multiple rounds of sanctions against elements of Iran’s oil-shipping shadow fleet, including entities connected with the Houthis.  

The Biden administration removed the Houthis from the FTO and Specially Designated Global Terrorist (SDGT) lists in February 2021, hoping to facilitate an end to the conflict in Yemen. Under Biden, Treasury issued only four rounds of sanctions focused on the Houthis before they began terrorizing the Red Sea in late 2023 in solidarity with Hamas. Throughout that period, however, the Houthis continued their engagement with FTOs such as Iran’s Islamic Revolutionary Guard Corps (IRGC) and Tehran’s other proxies.  

The Biden administration redesignated the Houthis as an SDGT in January 2024 for their Red Sea attacks. From that point forward, the administration was more active in sanctioning elements of the Houthis’ weapons procurement and financing networks. These actions largely targeted individuals and exchange houses, with Treasury reporting that the group “used Sana’a-based money services businesses under their control to move large sums and circumvent sanctions.”  

In the final days of the Biden administration, the Treasury Department sanctioned the Yemen Kuwait Bank, the first such action against a Yemeni bank.  

The Banking Sector in Houthi-Controlled Yemen Feels the Pressure   

Within two weeks of the FTO designation on March 4, eight banks based in Houthi-controlled Sanaa relocated to Aden, the interim capital of the Internationally Recognized Government (IRG) of Yemen. According to the Central Bank of Yemen (Aden), these banks constituted the majority of banks headquartered in Sanaa at that time. The IRG had attempted to compel banks to relocate out of Houthi-controlled territory in the summer of 2024; however, the Houthis successfully resisted. This enabled continued access to the international banking system for the terrorist group despite the SDGT designation whose express purpose is “to disrupt the financial support network for terrorists and terrorist organizations.” 

In response to the relocation of banks, the Houthis restricted the movement of bank employees. According to Asharq al-Awsat’s sources, the Houthis provided checkpoints around Sanaa with a list of bank employees and instructed that these individuals be arrested if they attempted to leave the city. This led to the detention of at least five individuals. 

The U.S. Should Ensure International Community Isolates Houthi Financing 

In 2024, the Houthis were so concerned about banking isolation that they were willing to escalate militarily over financial restrictions, indicating the catastrophic consequences this action would have for the terrorist group. President Trump should consider issuing an executive order authorizing further sanctions against persons or banks determined to operate in the financial services sector of the Houthi-controlled economy, including, but not limited to, the remaining unsanctioned financial institutions in Houthi-controlled territory as well as the Central Bank of Yemen (Sanaa). The United States should also consider pressuring the international payment messaging system SWIFT to disconnect any Houthi-controlled financial institutions.  

Bridget Toomey is a research analyst at the Foundation for Defense of Democracies (FDD), where she focuses on Iranian proxies, specifically Iraqi militias and the Houthis. For more analysis from Bridget and FDD, please subscribe HERE. Follow Bridget on X @BridgetKToomey. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.