U.S. Sen. Cynthia Lummis (R-WY) said the CLARITY Act is intended to close illicit-finance gaps exploited by groups such as North Korea’s Lazarus Group, asserting that the legislation would give the U.S. Treasury Department and cryptocurrency exchanges authority to proactively freeze suspicious transactions before funds leave U.S. jurisdiction.
Sections 303 and 305 Target Illicit Funds
Lummis, a sponsor of the measure, highlighted Sections 303 and 305 as key provisions focused on disrupting the movement of illicit funds. According to the senator, these sections are designed to strengthen Treasury’s tools and enable exchanges to intervene earlier when detecting potentially unlawful transfers.
Background: Lazarus Group and Crypto Theft
U.S. officials have linked North Korea’s Lazarus Group to several major cryptocurrency thefts in recent years, alleging the group uses stolen digital assets to support the country’s sanctioned programs. The use of mixers, cross-chain bridges, and rapid fund transfers has complicated recovery efforts and enforcement actions.
Implications for Exchanges and Enforcement
If enacted as described, the CLARITY Act could formalize preemptive freezes of high-risk transactions and expand information sharing between exchanges, the Treasury Department, and law enforcement. Supporters argue such measures would help prevent funds from being moved beyond the reach of U.S. authorities and bolster existing anti-money-laundering and sanctions-compliance frameworks.
Broader Policy Push
The proposal aligns with a wider legislative and regulatory effort in Washington to address illicit finance in digital assets, alongside ongoing Treasury and law-enforcement actions targeting sanctioned entities and their facilitators.