A Canadian government report has flagged concerns over terror financing linked to Khalistani extremists. According to a new report released by the Canadian Department of Finance, several terrorist entities, including Khalistani violent extremist groups, continue to receive financial support originating from Canada for activities linked to politically motivated violence.
Canada has long been seen as a base for groups such as Babbar Khalsa, the International Sikh Youth Federation, and Sikhs for Justice, and Ottawa has now, for the first time, formally recognized their presence and financial activities.
The report on ‘2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada’ noted that these groups continue to draw funds for “activities linked to politically motivated violence.”
“Several terrorist entities listed under the Criminal Code in Canada that fall under the Politically Motivated Violent Extremism (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 said.
The government report stated that Khalistani extremist groups are using “violent means to establish an independent state within Punjab, India,” and are suspected of raising funds in multiple countries, including Canada.
It noted that these groups are exploiting charitable donations, drug trafficking, and vehicle thefts for financing, highlighting Canada as a hub for terror funding. The report also pointed to the misuse of the non-profit sector and contributions from expatriates by Khalistani terrorists.
"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 noted.
The report highlighted the financing networks of such groups, noting that they exploit non-profit organisations and other channels to fund their activities.
It pointed out that these terror groups employ "diverse funding methods to sustain their operations, including the abuse of the MSB and banking sectors; use of cryptocurrencies; state financing; abuse of the charitable and NPO sector; and criminal activity."
While the Khalistani presence in Canada has been documented through videos, witness statements, and media reports, there has been limited action over the years.
“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," the report stated.
It further observed that Canadian NPOs generally carry minimal risks for money laundering and terrorist financing, “with only a small subset undertaking activities that are vulnerable to terrorist financing abuse," recommending that such risks be assessed on a case-by-case basis.
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