Khalistani ‘terrorist’ entities’ funding originates in Canada, govt report admits

A Canadian government report, which comes within six months of Prime Minister Mark Carney taking office, has described Khalistani extremists as "terrorist entities" and flagged concerns over terror financing linked to these groups.

The report revealed that much of the funding for Khalistani extremist groups originates in Canada and noted that the extremist group is getting financial support from within the country and using it inappropriately.

Although the Khalistani presence in Canada has been documented through videos, witness accounts, and media reports, there has been limited action over the years.

Also Read: Canada intel report confirms Khalistani extremists use its soil for violence in India

Canadian finance department report

The findings are part of a government report released by Canada’s Department of Finance, titled 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada.

According to the report, Babbar Khalsa International, the International Sikh Youth Federation, are among the groups that have received the majority of funding from Canada.

For the first time, Ottawa has formally acknowledged the presence of such organisations and their financial activities, noting that they continue to obtain money from Canada 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 stated.

Also Read: Canada: Caged effigies of PM Modi, Shah at Khalistan supporters' anti-Hindu rally

Funding originates in Canada

The Canadian government report added that Khalistani extremist groups are pursuing "violent means to establish an independent state within Punjab, India". It further noted that these organisations are suspected of raising funds, across multiple countries, including Canada.

The assessment detailed the financing networks used by such groups, saying they exploit non-profit organisations (NPOs) and other channels to fund their operations.

This includes misusing charitable donations, engaging in drug trafficking, and even vehicle thefts, with Canada emerging as a hub for terror financing. 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.

Also Read: Khalistani group disrupts Independence Day celebration by Indians in Melbourne

Diverse funding methods

The report 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".

"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".

The report recommended that the Canadian government assess that these risks should be thoroughly evaluated on a case-by-case basis.