Canada’s 2025 finance report acknowledges that Khalistani extremist groups, including Babbar Khalsa and ISYF, are operating and raising funds within the country, raising concerns over national security and international relations.

Canada’s Admission: Khalistani Terror Groups Funded from Within Its Borders

Introduction

In a significant development, Canada’s Department of Finance has officially acknowledged that Khalistani extremist groups are operating within its borders and receiving financial support. This revelation, made in the 2025 Assessment of Money Laundering and Terrorist Financing Risks, marks a pivotal moment in the ongoing concerns over Canada’s role in harboring and financing separatist activities.

The Khalistani Movement: A Brief Overview

The Khalistani movement seeks to establish an independent Sikh state, Khalistan, primarily in the Indian state of Punjab. Over the years, several organizations advocating for this cause have been designated as terrorist entities by various countries, including Canada. Prominent among these are Babbar Khalsa International (BKI), the International Sikh Youth Federation (ISYF), and Sikhs for Justice (SFJ).

Official Acknowledgment by Canada

For the first time, Canada’s government has formally recognized the presence and activities of these extremist groups within its territory. The finance department’s report highlights that these organizations continue to receive financial backing from within Canada, which is utilized for activities linked to politically motivated violence. The report also notes that these groups exploit various channels, including charities, drug trafficking, and auto theft, to fund their operations.

Methods of Fundraising and Financial Channels

The report details several methods employed by Khalistani groups to raise and transfer funds:

Charitable Organizations: Some groups misuse registered charities to collect donations under the guise of humanitarian aid.
Criminal Activities: Involvement in drug trafficking and auto theft provides illicit funds to support their agendas.
Cryptocurrency: The use of digital currencies offers a degree of anonymity in financial transactions, making it challenging to trace and regulate.
Non-Profit Organizations (NPOs): These entities are sometimes exploited to channel funds without proper oversight.

Implications for Canada-India Relations

This admission has significant implications for Canada’s diplomatic relations with India. India has long expressed concerns about the activities of Khalistani groups operating from Canadian soil. The acknowledgment by Canada may strain bilateral ties further, especially in light of previous incidents, such as the 2023 assassination of Khalistani leader Hardeep Singh Nijjar in Canada.

Canada’s Response and Future Measures

In response to these revelations, Canadian authorities have pledged to enhance monitoring and regulation of financial transactions to prevent misuse by extremist groups. The government has indicated that it will work closely with international partners to address the challenges posed by the misuse of financial systems for terrorist financing.

Canada’s official acknowledgment of the funding and operations of Khalistani extremist groups within its borders marks a critical juncture in the global fight against terrorism and the misuse of financial systems. It underscores the need for robust measures to prevent the exploitation of financial channels by extremist entities and highlights the importance of international cooperation in addressing such threats.