Khalistani extremists receive financial support from inside Canada: Report

Illegal drug trafficking remains the highest money laundering threat in Canada, dwarfing even extremist financing methods.

Ottawa: At least two Khalistani extremist groups have received financial support originating from 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' has identified the Khalistani extremist groups receiving financial support originating from Canada as Babbar Khalsa International and the International Sikh Youth Federation.

The development comes two months after a report by Ottawa’s intelligence agency said a politically motivated violent extremism threat in Canada since the mid-1980s has manifested through Khalistani extremists seeking to use violent means to create an independent nation state called Khalistan within India’s Punjab.

The latest report said the 'Politically Motivated Violent Extremism (PMVE) encourages “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 said.

Several terrorist entities listed under the Criminal Code in Canada that fall under the PMVE category, such as Hamas, Hezbollah, and the Khalistani violent extremist groups Babbar Khalsa International and the International Sikh Youth Federation, have been observed by law enforcement and intelligence agencies to receive financial support originating from Canada, the report pointed out.

In 2022, the Financial Transactions and Reports Analysis Centre of Canada's (FINTRAC) Operational Alert on Terrorist Activity Financing had identified Hezbollah as the second most frequently identified international terrorist entity to receive outgoing Canadian funds.

The 2025 Assessment report detailed the PMVE financing methods too and said Hamas and Hezbollah are established and well-resourced groups that fall under the PMVE category.

“These groups use diverse funding methods to sustain their operations, including the abuse of the money services businesses (MSB) and banking sectors; use of cryptocurrencies; state financing; abuse of the charitable and non-profit organisations (NPO) sector; 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 revealed.

Abuse of non-profit and charitable activities was a common concern for the organisations mentioned.

“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 pointed out.

Despite these observations, it is estimated that revenue generation through NPO abuse represents a relatively small percentage of operational budgets of terrorist groups overall, it clarified.

Illegal drug trafficking remains the highest money laundering threat in Canada, followed by fraud, commercial trade fraud and trade-based money laundering, and tax crimes, the report said.

“These threats are each estimated to involve billions of dollars in illicit proceeds annually in Canada,” it added.

The latest report comes two months after the Canadian Security Intelligence Service’s report for 2024, released on June 18, said ongoing involvement in violent activities by Canada-based Khalistani extremists continues to pose a national security threat to Canada and Canadian interests.

“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,” it had said.

That report appeared to have vindicated New Delhi’s consistent position that pro-Khalistani elements in Canada have been carrying out anti-India activities with impunity.