Russia's law enforcement will be monitoring bitcoin-to-fiat transactions especially closely, according to the country's financial surveillance agency, Rosfinmonitoring.

Rosfinmonitoring, which normally tracks money flows that might be linked to money laundering and terrorism financing, has its eyes on bitcoin. Now it will be paying special attention to cashing out of bitcoin, the agency's deputy head German Neglyad said during a Wednesday hearing on the financial markets in the national parliament, news agency Regnum reported.

"Banks are already taking notice of such exchange operations, meaning that when they see the money coming in after trading virtual assets for hard currency, they calculate the value and notify us," Neglyad said. He didn't specify how banks identify such transactions, according to the report.

Neglyad added that Rosfinmonitoring is planning to add a new classification code for suspicious transactions involving crypto. According to his interview to the news agency TASS, also published on Wednesday, criminals in Russia are most often using bitcoin, ether and monero for purposes including terrorism financing. While not specifying which terrorist groups were involved, he said the data was received in collaboration with other countries' financial monitoring bodies.

Last August, Rosfinmonitoring said it was planning to develop its own blockchain transaction tracing tool that would allow the identification of the end beneficiaries of crypto transactions.

Read also: Russian Activists Use Bitcoin, and the Kremlin Doesn’t Like It

Russian President Vladimir Putin has called for an end to illegal cross-border transactions involving crypto. Cryptocurrencies have a status of taxable property in Russia, with specific taxation rules expected to become a law soon.

Russian civil servants have been explicitly banned from owning crypto, according to an order issued by the country’s Ministry of Labour in January. At the same time, bitcoin gained some traction as a fundraising tool among Russia's civil and political activists.