Khalistani groups linked to terror funding: Canada

A new Canadian government assessment has identified Khalistani extremist groups, including Babbar Khalsa International (BKI) and the International Sikh Youth Federation (ISYF), as organisations exploiting Canada’s financial system and diaspora networks to raise funds. They are listed alongside Hamas and Hezbollah in the 2025 Assessment of Money Laundering and Terrorist Financing Risks released this week.

The report states these politically motivated violent extremist (PMVE) entities continue to pose significant financing risks, despite tighter compliance measures. The Khalistani groups are described as operating through “smaller pockets of individuals” who raise money from sections of Canada’s Sikh diaspora and non-profit organisations.

The assessment also details the financing activities of Hamas and Hezbollah, noting their use of informal channels. Hezbollah is frequently flagged in Canadian financial transactions, while Hamas is among the first militant organisations to have solicited cryptocurrency donations. The report reiterates concerns over the misuse of money service businesses, hawala networks and virtual assets.

Iran is flagged as a state sponsor, with the report noting Tehran uses front companies, financial institutions and cryptocurrencies to channel support to Hamas and Hezbollah to evade international sanctions.

Charities and non-profit organisations remain a particular area of vulnerability. The assessment notes that while only a fraction of extremist groups’ operational budgets flow through such organisations, the sector provides a cover of legitimacy for raising steady contributions.

For India, the findings come against the backdrop of repeated protests over pro-Khalistan activities in Canada. New Delhi has accused Ottawa of failing to curb fundraising and intimidation campaigns by groups it links to terrorism in Punjab. The issue has strained bilateral ties in recent years, particularly after the killing of Khalistani leader Hardeep Singh Nijjar last year.

While Canadian authorities stress that oversight is being tightened, the assessment concedes that terrorist financing risks remain high, particularly with the expanding use of cryptocurrencies and informal value transfer systems.