"Regain Yemen" issues its new report: Houthi Destruction of the Banking Sector

"Regain Yemen" Initiative released its new report on Monday titled "Houthi Destruction of the Banking Sector - Money Laundering and Looting."

The report focuses on the serious violations committed by the Iran-backed Houthis, against banks in the Yemeni capital Sana'a and several provinces, which have caused damage to the banking sector that has been forced to operate in a challenging environment. One of the most prominent challenges is the severe liquidity crisis and the lack of trust from depositors in banks due to restrictions on withdrawing deposits in local and foreign currencies from banks.

The report sheds light on the impact of the Houthi coup on the banking sector, the consequences of Houthi targeting of the banking sector, the liquidity crisis, overdrafts withdrawls, the deterioration of the Yemeni riyal, the division of monetary policy, the banning of any new currency issuances, the targeting and bankruptcy of banks, external isolation, the opening of fake accounts, the looting of customer funds, and the decree banning usurious transactions.

The banking sector report highlights how the destructive Houthi coup has caused significant cracks in the Yemeni banking system, resulting in challenges that pose an existential threat to the survival of the banking sector itself and its ability to perform its natural functions as it did before the crisis.

The report illustrates how the Houthis exploited the war to gain complete control over the banking sector, destroying it and replacing it with exchange facilities that helped the Houthi militia obtain funding from abroad and evade anti-money laundering and terrorism financing measures.

The report indicates that the banking sector has been affected by the economic war waged by the Houthi militia, starting with the prohibition of trading in the national currency, which has worsened the liquidity crisis. In addition, banks have been forced not to deal with the Central Bank in Aden, and international organizations have been advised not to deal with a number of banks under the pretext of their affiliation with the Central Bank in Aden.

It highlights the restrictions and abuses by the Houthis, including their use of the banking sector for money laundering and looting. They have implemented unconstitutional laws to freeze bank accounts, seize interest on deposits, and prevent banks from collecting any form of interest on most banking transactions. These actions will expedite the bankruptcy of banks in the near future.

The report states that the Houthi militia worked diligently to destroy the banking sector and support exchange facilities. They imposed numerous contradictory regulations on banks, in addition to raiding branches, conducting searches, and arresting and kidnapping banking officials. In exchange for full and unconditional support for exchange facilities, the Houthis opened special accounts to supply sales of oil derivatives and household gas. This cash flow exceeded the reserves of banks, which affected the flow of goods and services and exacerbated the humanitarian crisis.