A new Canadian government report has revealed that Khalistani extremist groups Babbar Khalsa International and the International Sikh Youth Federation continue to receive financial backing from within Canada. The findings are part of the 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, which examined politically motivated violent extremism (PMVE) and its funding channels.

The report stated that PMVE involves the use of violence to establish new political systems or reshape existing ones, often linked to self-determination struggles rather than racial or ethnic supremacy, reported PTI. Organisations under this category include Hamas, Hezbollah, and Khalistani extremist outfits, which Canadian authorities confirmed have benefited from domestic financial support.

According to the assessment, Hamas and Hezbollah remain better organised and resourced, using diverse methods such as misuse of banking systems, money services businesses, cryptocurrency transactions, state sponsorship, and exploitation of charities and non-profits. Khalistani groups, although reduced in scale, reportedly sustain smaller pockets of supporters who continue fundraising in Canada and abroad, particularly within diaspora communities.

The misuse of charitable and non-profit organisations (NPOs) was flagged as a recurring concern. Intelligence agencies noted that extremist groups have tapped into NPO networks to solicit donations, move funds, and mask financial transfers. However, the report clarified that such revenue forms only a small fraction of overall terrorist budgets.

Illegal drug trafficking was identified as the highest money laundering threat in Canada, followed by fraud, trade-based laundering, and tax crimes, each generating billions annually in illicit proceeds.

The assessment follows a June 2024 report by the Canadian Security Intelligence Service (CSIS), which confirmed that since the mid-1980s, Canada-based Khalistani extremists have engaged in violent activities to pursue the creation of a separate state in Punjab, India. This finding echoed New Delhi’s longstanding concerns about pro-Khalistani elements in Canada operating with impunity.