Khalistani violent extremist groups are among “several terrorist entities” that have been receiving financial support originating from Canada, according to a new Canadian government report on terror financing and money laundering.
The findings are part of the ‘2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada’, which identifies Babbar Khalsa International and the International Sikh Youth Federation as among the Khalistani groups that have received funding from Canada.
The government report acknowledged that the Khalistani extremist groups are “supporting violent means to establish an independent state within Punjab, India”. It said that Khalistani groups are suspected of raising funds in a number of countries, including Canada.
The report also mentioned that 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.
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.
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.
FINTRAC’s 2022 Operational Alert on Terrorist Activity Financing identified Hezbollah as the second most frequently identified international terrorist entity to receive outgoing Canadian funds.
The findings provide significant leverage to India, which has repeatedly raised concerns about the activities of pro-Khalistan elements operating from Canadian soil.
The report also highlighted the abuse of non-profit and charitable activities. 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 also tend to use charitable networks to solicit donations from diaspora communities to raise and move funds, including through NPOs.
Despite these observations, it is estimated that revenue generation through NPO abuse represents a relatively small percentage of operational budgets of terrorist groups overall.
In 2024 the Egmont Group, a united body of 174 Financial Intelligence Units, published an overview of NPO abuse typologies and ways for financial intelligence units to make the best use of international cooperation by sharing financial information and intelligence to enhance detection and achieve better results in disrupting the abuse of NPOs to finance terrorism.
Relations between the two countries plummeted in 2023 after Justin Trudeau, the then Canadian Prime Minister, alleged “potential” involvement of Indian government agents in the killing of Canada-based Khalistan separatist Hardeep Singh Nijjar, an allegation that India rejected as “absurd” and “motivated”. This led to downgrading of diplomatic ties. But the thaw took place in Canada’s Kananaskisin June as PM Modi and Canadian counterpart Carney “agreed to take calibrated and constructive steps to restore stability” in their relationship, starting with the early return of High Commissioners to each other’s capitals.