A Canadian government report has acknowledged that Khalistani extremist organisations continue to operate and raise funds within Canada, confirming India’s long-held concerns about pro-Khalistani elements using Canadian soil to fuel anti-India activities.

The report, titled 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, specifically identified two groups – Babbar Khalsa International and the International Sikh Youth Federation – as recipients of funds originating in Canada.

“Khalistani extremist groups supporting violent means to establish an independent state within Punjab, India, are suspected of raising funds in a number of countries, including Canada,” the assessment states.

The report says Khalistani extremists are part of a wider category called Politically Motivated Violent Extremism (PMVE). This type of extremism, the report explains, “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,” it adds.

Khalistani groups named alongside Hamas and Hezbollah

The Canadian government listed at least two Khalistani groups alongside groups like Hamas and Hezbollah, noting that all of them “have been observed by law enforcement and intelligence agencies to receive financial support originating from Canada.”

It also also pointed out that Khalistani groups, which once had an extensive fundraising network in Canada, now seem to operate through smaller pockets of individuals loyal to the cause.

India has not yet reacted to the report.

How terror groups raise money

The assessment explains how these groups find money to fund their operations. Hamas and Hezbollah, for instance, “use diverse funding methods to sustain their operations, including the abuse of the money services businesses (MSB) and banking sectors; use of cryptocurrencies; state financing; abuse of the charitable and non-profit organisations (NPO) sector; and criminal activity.”

For Khalistani outfits, the report reveals that diaspora communities are a key target. “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,” it said.

which warned that “since the mid-1980s, the PMVE threat in Canada has manifested primarily through Canada-based Khalistani extremists seeking to use and support violent means to create an independent nation state called Khalistan, largely within Punjab, India.”

The new findings follow a June 18, 2024 report by the Canadian Security Intelligence Service (CSIS), which warned that since the 1980s, “the PMVE threat in Canada has manifested primarily through Canada-based Khalistani extremists seeking to use and support violent means to create an independent nation state called Khalistan, largely within Punjab, India.”

The India-Canada backdrop

The report comes at a sensitive time in India-Canada relations, which hit a low in September 2023 when then Canadian Prime Minister Justin Trudeau accused India of involvement in the killing of Khalistani terrorist Hardeep Singh Nijjar on its soil.

New Delhi strongly rejected the allegation as “absurd and motivated,” triggering an unprecedented diplomatic standoff that saw both countries withdraw their envoys.

However, ties have since begun to ease after Mark Carney succeeded Trudeau and pledged to address India’s concerns. Envoys have been reinstated, though concrete action against Khalistani groups in Canada remains pending.