AT LEAST two Khalistani extremist groups have received financial support from within Canada, according to a new Canadian government report on terror financing.
The report, titled 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, named Babbar Khalsa International and the International Sikh Youth Federation as the groups receiving such support.
This comes two months after a report by Ottawa’s intelligence agency said politically motivated violent extremism in Canada since the mid-1980s has taken shape through Khalistani extremists seeking to use violence to create an independent nation state called Khalistan in India’s Punjab.
The new report defined Politically Motivated Violent Extremism (PMVE) as encouraging “the use of violence to establish new political systems, or new structures and norms within existing systems.”
“While PMVE may include religious elements, actors are more focused on political self-determination or representation, rather than racial or ethnic supremacy,” it added.
The report noted that several terrorist entities listed under Canada’s Criminal Code fall under the PMVE category, including Hamas, Hezbollah, Babbar Khalsa International, and the International Sikh Youth Federation. Law enforcement and intelligence agencies have observed these groups receiving financial support originating from Canada, it said.
In 2022, the Financial Transactions and Reports Analysis Centre of Canada’s (FINTRAC) Operational Alert on Terrorist Activity Financing identified Hezbollah as the second most frequently noted international terrorist group receiving Canadian funds.
The 2025 Assessment also outlined PMVE financing methods. It said Hamas and Hezbollah are well-resourced groups that use a variety of methods, including abuse of money services businesses and banking sectors, use of cryptocurrencies, state financing, exploitation of charitable and non-profit organisations (NPOs), and criminal activity.
“Khalistani extremist groups supporting violent means to establish an independent state within Punjab, India, are suspected of raising funds in a number of countries, including Canada. These groups previously had an extensive fundraising network in Canada but now appear to consist of smaller pockets of individuals with allegiance to the cause but seemingly no particular affiliation to a specific group,” the report said.
The report highlighted misuse of non-profit and charitable activities as a concern.
“The misuse of the charitable and NPO sectors has been observed as a prominent financing method used by Hamas and Hezbollah. Khalistani violent extremist groups have also been known to use networks to solicit donations from diaspora communities to raise and move funds, including through NPOs,” it said.
It clarified that revenue from NPO abuse represents a relatively small share of terrorist groups’ operational budgets overall.
The report added that drug trafficking is the largest money laundering threat in Canada, followed by fraud, commercial trade fraud, trade-based money laundering, and tax crimes.
“These threats are each estimated to involve billions of dollars in illicit proceeds annually in Canada,” it said.
The report follows the Canadian Security Intelligence Service’s 2024 assessment, released on June 18, which stated that ongoing involvement in violent activities by Canada-based Khalistani extremists continues to pose a national security threat.
“Since the mid-1980s, the PMVE threat in Canada has manifested primarily through Canada-based Khalistani extremists seeking to use and support violent means to create an independent nation state called Khalistan, largely within Punjab, India,” the CSIS report said.
That report aligned with New Delhi’s position that pro-Khalistani groups in Canada have been carrying out anti-India activities with impunity.
(With inputs from agencies)
