U.S. Sanctions on Yemen Bank Spark Debate Over Houthi Funding and Economic Impact

The U.S. Department of the Treasury announced sanctions on April 17, 2025, targeting the International Bank of Yemen and three of its top officials for their financial ties to Ansarallah, widely known as the Houthis. This move, part of a broader effort to disrupt the group’s access to global banking networks, aims to curb its ability to fund attacks on commercial shipping in the Red Sea. The decision has sparked debates about its potential to weaken the Houthis versus its unintended impact on Yemen’s already fragile economy.

The Houthis, a Yemeni armed group backed by Iran, have escalated their maritime assaults in recent years, disrupting a vital global trade route. By targeting the bank, the U.S. seeks to sever a critical financial lifeline that enables these operations. Yet, in a country where millions rely on remittances and humanitarian aid, the sanctions could ripple far beyond their intended target, affecting ordinary people struggling to survive.

The Treasury’s action follows a pattern of increasing pressure on Houthi-linked financial networks. Earlier this year, another Yemeni bank faced similar designations, reflecting a concerted push to isolate the group economically. But as the conflict drags on, questions remain about whether these measures can achieve their goals without deepening Yemen’s humanitarian crisis.

Based in Sana’a, the International Bank of Yemen holds a pivotal role in the country’s financial system, with access to the global SWIFT network for international transactions. U.S. authorities allege the bank has facilitated oil purchases for Houthi-associated businesses and helped the group evade sanctions by concealing asset confiscations from opponents. This financial maneuvering, they argue, sustains the Houthis’ military campaign.

The sanctioned officials—Kamal Hussain Al Jebry, Ahmed Thabit Noman Al-Absi, and Abdulkader Ali Bazara—serve as the bank’s chairman, executive general manager, and deputy general manager, respectively. Their designations aim to hold accountable those steering the bank’s operations in support of the Houthis, a group labeled a Foreign Terrorist Organization by the U.S. State Department in March 2025.

Sanctions like these have proven effective in disrupting large-scale financial flows. Data shows a 90% drop in international transactions for Houthi-linked networks following similar measures. However, terrorist groups often adapt, turning to informal systems like hawalas or cryptocurrencies to move funds, which complicates efforts to fully choke off their resources.

While the U.S. aims to weaken the Houthis, the sanctions risk exacerbating Yemen’s economic woes. The country’s banking sector is already split between Houthi-controlled Sana’a and the internationally recognized government’s base in Aden. Efforts by Aden’s Central Bank to relocate banks from Sana’a have met resistance, with the International Bank of Yemen refusing to comply, further entrenching the divide.

Yemen’s economy, heavily reliant on remittances worth nearly $4 billion annually, faces severe strain. Sanctions have slashed international transactions for targeted banks by up to 95%, making it harder for families to access funds from abroad. With 80% of Yemenis living in poverty and 90% of food imported, disruptions to financial flows could drive up prices and worsen hunger.

Humanitarian groups have raised alarms about the broader fallout. Sanctions, while targeting illicit finance, often complicate aid delivery in conflict zones. In Yemen, where millions depend on external support, any delay in funding or banking access could have dire consequences, underscoring the delicate balance between security and humanitarian priorities.

The sanctions reflect a broader U.S. strategy to counter Iran’s regional influence, given its long-standing support for the Houthis. Iran provides weapons, training, and financial backing, enabling the group to project power across the Red Sea and threaten global trade routes. This relationship, while not one of direct control, amplifies the Houthis’ role in Iran’s network of allied groups.

Yet, the Houthis are not mere proxies. They pursue local objectives, sometimes acting independently of Tehran’s preferences, such as escalating Red Sea attacks. This autonomy complicates efforts to address the conflict through diplomacy, as neither sanctions nor negotiations fully align the interests of all parties involved.

The internationally recognized Yemeni government, backed by Saudi Arabia and operating from Aden, sees the sanctions as a tool to bolster its authority over the banking system. However, the Houthis’ grip on northern Yemen and their defiance of Aden’s regulations suggest that financial pressure alone may not shift the conflict’s dynamics.

The U.S. sanctions on the International Bank of Yemen highlight the ongoing challenge of combating terrorist financing without destabilizing vulnerable economies. While the measures aim to disrupt Houthi operations, their success hinges on international coordination and the ability to close gaps exploited by informal financial networks. The Treasury’s commitment to supporting Yemen’s recognized government signals a long-term strategy, but immediate results remain uncertain.

For Yemenis, the stakes are painfully high. The interplay of sanctions, conflict, and economic fragmentation threatens to deepen a crisis that has already left millions in despair. As global powers navigate this complex landscape, the human cost of these decisions will likely shape the path forward, demanding a careful balance between security and survival.