Aden (South24 Center)

On Friday (January 17), the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against the Yemen-based Yemen Kuwait Bank for Trade and Investment (Yemen Kuwait Bank) for its financial support to the Houthis, a US-designated terrorist organization.

The OFAC pointed out that the Houthis rely on a few key financial institutions like the Yemen Kuwait Bank to access the international financial system. This enables them to fund their attacks against the US’ interests and Washington’s regional partners.

Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith said: “The United States is committed to disrupting these illicit channels and working with the internationally recognized Government of Yemen to ensure that the country’s banking sector remains insulated from Houthi influence.”

According to the OFAC, the bank has played a pivotal role in exploiting the Yemeni banking sector to launder money and transfer funds to its allies, including the Lebanese Hezbollah.

The statement added: “The Yemen Kuwait Bank has helped the Houthis establish and finance front companies, which the group has used to facilitate Iranian oil sales in coordination with sanctioned Houthi-associated money exchange Swaid and Sons for Exchange Co.”

The OFAC indicated that “Senior Houthi officials, including Hashem Ismail Ali Ahmad al-Madani, the sanctioned governor of the Houthi-aligned central bank in Sanaa, have played key roles in transferring funds to the Houthis from the Iranian Islamic Revolutionary Guard Corps”.

The sanctions include “blocking all assets affiliated with the bank in the United States or in the possession or control of U.S. persons”. In addition, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked”. 

The OFAC stressed that violating these restrictions can entail imposing additional sanctions against the parties involved, including slapping secondary sanctions against the foreign banks that facilitate the bank’s operations.

Regarding the possible consequences, the OFAC pointed out that the decision aims to obstruct the Houthi abilities to access the international financial system. Furthermore, it stressed that sanctioning the bank is pursuant to Executive Order 13224 which allows the targeting of entities supporting terrorism.

In response, the Yemen Kuwait Bank issued a statement saying that “the US measure has a political background related to the current escalation between the United States and the Houthi government, and not as a result of the bank’s violation of international banking rules and traditions”.

The bank stressed that its local operations are continuing as usual across all its branches, adding that the decision only affects the operations that are of international nature. According to the statement, the bank is seeking to reverse the decision through official channels.

The Yemen Kuwait Bank, founded in 1977, is one of the oldest commercial banks owned by the private sector. Its main headquarters is in Sanaa and it has other branches in other governorates, including the capital Aden in South Yemen.

According to its official website, the bank was established equally between Yemeni and Kuwaiti investors. In 1988, the Yemeni investors acquired all the bank's shares after the withdrawal of the Kuwaiti investors. However, the bank has maintained its name ‘The Yemen Kuwait Bank’ until today.

In June 2024, the bank, along with five other banks based in Sanaa, was sanctioned by the Central Bank of Aden, which included banning their access to the SWIFT system. This came after the bank failed to respond to the demand of moving its main headquarters and operations from Sanaa to Aden as well as cutting off its ties with the Houthis.

However, in July 2024, under pressure from Saudi Arabia and the US Envoy to Yemen, the Presidential Leadership Council (PLC) reversed these measures and suspended the decisions of the Central Bank in Aden.

The measures taken by the US Department of the Treasury comes three days prior to the official inauguration of US President-elect Donald Trump who will start his second Presidential term amid prospects that he may raise the Houthi designation to the ‘Foreign Terrorist Organization’(FTO) which is the most dangerous one, thereby placing it alongside the Al-Qaeda and ISIS.