Law Enforcement Groups Warn CLARITY Act Provisions Could Weaken Anti-Money Laundering Safeguards

A coalition of major US law enforcement organizations has expressed concerns about provisions in the Digital Asset Market Clarity Act (CLARITY Act), warning that it could create oversight gaps and make it harder to investigate illicit activity.

The joint letter, signed by four organizations - the National Association of District Attorneys, the National Association of Assistant U.S. Attorneys, the International Association of Chiefs of Police, and the National Sheriffs' Association - focuses on Section 604, also known as the Blockchain Regulatory Certainty Act (BRCA).

This provision aims to clarify that non-custodial developers and infrastructure providers are not money transmitters solely because they write software or support blockchain networks. However, the law enforcement groups argue that this could reduce transparency, weaken accountability, and create gaps within the anti-money laundering framework.

The concerns have been echoed by Catholic organizations and anti-human trafficking groups, who fear that the provision could make it harder to track financial flows linked to organized crime and human trafficking networks. However, supporters of the legislation argue that the fears are overstated, citing a recent analysis by blockchain analytics firm TRM Labs.