U.S. Sanctions on Houthis Come With Broad Exceptions

Latest Developments

The Biden administration on January 17 designated the Iran-backed Houthi group Ansar Allah as a Specially Designated Global Terrorist (SDGT). However, the designation includes five general license exemptions that dilute its impact, with White House National Security Advisor Jake Sullivan assuring there are “unprecedented carve outs and licenses.” The administration refrained from designating the Yemen-based group as a Foreign Terrorist Organization (FTO), which would have imposed additional penalties on the group compared to an SDGT designation alone. The announcement follows months of attacks by the Houthis on commercial and military vessels in the Red Sea, Gulf of Aden, and the Bab el-Mandeb Strait aimed at disrupting international shipping.

Expert Analysis

“With the restoration of terrorism sanctions against the Iran-backed Houthis, the administration must ask itself one fundamental question: What did this three-year lull achieve other than buying time and space for the Houthis to rearm and acquire more advanced Iranian weaponry?” — Behnam Ben Taleblu, FDD Senior Fellow

“This was a PR gambit to get credit for doing something without changing policy toward the Houthis. Not only did the administration choose to avoid maximalist pressure on the Houthis by not re-listing the group as a Foreign Terrorist Organization, but it also turned around and issued five general licenses to gut the impact of renewed terrorism sanctions.” — Richard Goldberg, FDD Senior Advisor

Terrorist Designation

The Trump administration designated Ansar Allah as both an FTO and SDGT in January 2021, weeks before leaving office. By creating adequate licenses for humanitarian assistance, the Treasury Department addressed complaints from international organizations that the designations would exacerbate an already dire humanitarian crisis. However, in February 2021, the Biden administration delisted Ansar Allah as both an FTO and SDGT, misleadingly citing an alleged need to ease the delivery of humanitarian assistance to the people of Yemen.

Exemptions Make SDGT Designation Less Effective

FTO and SDGT designations are usually made in tandem for maximum impact since the two complement each other. However, the Biden administration SDGT’s designation of Ansar Allah alone, together with five general license exemptions, dramatically diminishes the designation’s impact. Two of the broadest exemptions include allowing for transactions with the Houthi group of petroleum and refined petroleum products and operations of ports and airports from which the group can profit. Usually, SDGT sanctions take effect immediately, but the administration’s decision to allow a 30-day waiting period allows Ansar Allah and their facilitators to move assets and money to continue having access to resources.

Differences Between FTO and SDGT Designations

An SDGT provides valuable tools to financially isolate a group from international banking through the threat of secondary sanctions — targeting any institution or individual in the world connected to the U.S. financial system. An FTO applies only to entities within U.S. jurisdiction. An SDGT also carries a higher civil penalty of $250,000, or twice the amount of the transaction that is the basis for the penalty, compared to $50,000 in an FTO.

An SDGT designation does not come with the same legal authority as an FTO to criminally charge parties with material support for terrorism — a threat that creates enormous economic and political isolation for a terrorist organization. Likewise, a conviction for providing material support to a group designated as an FTO could carry a penalty of up to life in prison, while the maximum for providing material support for an SDGT is up to 20 years in prison. Unlike an FTO designation, an SDGT designation also does not come with a visa ban to deny admission to the United States.

“Foreign Terrorist Organization (FTO) Designation and Specially Designated Global Terrorist (SDGT) Designation,” by Matthew Zweig

“CENTCOM: Houthis Carry Out Multiple Attacks on Red Sea Shipping,” FDD Flash Brief

“U.S. Navy Intercepts Houthi-Bound Iranian Missile Component Shipment,” FDD Flash Brief

“Houthis continue attacks after Western strikes target launch sites,” by Joe Truzman and Bill Roggio