Canada officially flags Khalistani terror groups operating and fundraising on its soil

In a development that validates India’s repeated warnings, Canada has, for the first time, officially acknowledged the presence and funding of Khalistani extremist groups on its soil. The revelation comes in a new report by Canada’s Department of Finance assessing the country’s most pressing money laundering and terrorist financing threats.

The 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada identifies Khalistani groups, alongside Hamas and Hezbollah, as terrorist entities under Canada’s Criminal Code that use or advocate violence to pursue political objectives. The report specifically mentions Babbar Khalsa International and the International Sikh Youth Federation as receiving financial support originating from within Canada.

“Several terrorist entities listed under the Criminal Code in Canada that fall under the PMVE (politically motivated violent extremism) category… have been observed by law enforcement and intelligence agencies to receive financial support originating from Canada,” the report states.

While the report notes that these groups previously maintained extensive fundraising networks, they now appear as smaller pockets of individuals committed to the cause but not necessarily affiliated with a specific organization.

Historically, Khalistani extremists have raised funds through diaspora communities and non-profit organisations, though these contributions form a relatively minor part of their budgets. Criminal activities, misuse of banking and charitable sectors, state financing, and cryptocurrencies also sustain their operations.

The Khalistani movement, which seeks to carve out a sovereign state in Punjab, has long been a point of contention between India and Canada. India’s concerns were historically ignored, straining diplomatic relations between the two nations.

Tensions peaked in September 2023 when then-Canadian Prime Minister Justin Trudeau alleged Indian involvement in the killing of Khalistani terrorist Hardeep Singh Nijjar on Canadian soil. India strongly refuted the claims, prompting a diplomatic standoff that included the withdrawal of envoys.

Relations showed signs of improvement after Mark Carney assumed Canada’s premiership, with both sides agreeing to reinstate envoys. However, decisive action against Khalistani extremist networks in Canada remains limited.

The new report, by formally recognizing the threat posed by Khalistani groups, underscores the need for continued vigilance and international cooperation in countering politically motivated violent extremism.