“Section 305 gives exchanges the power to halt dirty funds before they slip out of reach,” Senator Cynthia Lummis emphasized on social media as she urged colleagues to approve the CLARITY Act ahead of the August Senate recess. The Wyoming Republican singled out the bill’s anti-money laundering measures aimed squarely at curbing North Korea’s notorious Lazarus Group, which has been responsible for a staggering $6.75 billion in crypto heists over recent years.
The legislation’s Section 303 equips the Treasury Department with fresh authority to flag foreign financial entities tied to digital asset laundering as "primary money laundering concerns," a designation that forces crypto exchanges and stablecoin providers to freeze or block transactions associated with those entities. This mirrors existing powers long used against traditional banks but applies them to the crypto space for the first time, closing critical loopholes that have allowed bad actors linked to North Korea to move stolen funds unchecked.
Meanwhile, Section 305 targets suspicious transactions at the operational level. Exchanges can now impose a temporary hold of up to 30 days on any transfer they suspect involves illicit proceeds, extending up to 180 days if requested by law enforcement. This tool grants firms a legal safe harbor when acting in good faith, reinforcing ongoing obligations to file suspicious activity reports. Together with Section 201, which imposes Bank Secrecy Act anti-money laundering rules on digital asset firms, these measures form a full framework to combat illicit finance in crypto.
The urgency behind the bill is clear. In the first half of 2026 alone, North Korean hackers accounted for roughly two-thirds of all crypto thefts globally, netting around $643 million from 207 attacks. The Lazarus Group was behind some of the largest incidents, including an April raid draining $285 million from the Solana-based Drift Protocol and compromising the Layerzero cross-chain bridge linking KelpDAO to Ethereum. Lawmakers view the CLARITY Act as a key step to cut off these flows before stolen funds slip through exchanges and cross borders.
