Two of the most prominent organisations identified in the assessment are Babbar Khalsa International and the International Sikh Youth Federation
Canada has formally acknowledged that Khalistani violent extremist groups are receiving financial support from sources within its own borders, raising concerns about national security and international trust.
The admission appears in a newly released government report titled 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, published by the Ministry of Finance. The document warns that pro-Khalistan groups, categorised under politically motivated violent extremism (PMVE), continue to draw financial backing from individuals and networks based in Canada.
According to the report, intelligence and law enforcement agencies have noted that while some of the larger fundraising structures that existed in the past have faded, extremist causes remain sustained through smaller, loosely connected groups and individuals. These networks, officials said, provide money to organisations and campaigns that advocate for the establishment of Khalistan, an independent Sikh homeland carved out of India’s Punjab region.
Two of the most prominent organisations identified in the assessment are Babbar Khalsa International and the International Sikh Youth Federation. Both are officially listed as terrorist groups under Canada’s Criminal Code, and both have a history of violent activity linked to separatist movements. While neither group maintains the expansive infrastructure that it once did, the government said their supporters remain active and resourceful, adapting to modern fundraising methods and exploiting gaps in oversight.
The report issues a stark warning that terrorist financing not only sustains extremist activity but also carries broader risks for Canada itself. “Terrorist financing poses significant threats to Canada’s national security, as well as to its reputation as a safe and reliable global partner,” the document states. Officials cautioned that continued financial activity by extremist groups could erode international confidence in Canadian institutions, undermine law enforcement cooperation, and damage the country’s standing in global financial systems.
The government’s acknowledgement follows a series of warnings from Canada’s own security agencies. In particular, a recent assessment by the Canadian Security Intelligence Service (CSIS) highlighted the long history of Khalistani extremism in the country. According to CSIS, the roots of the threat extend back to the 1980s, when Canada became a hub for pro-Khalistan activism, some of it violent in nature. The agency noted that decades later, a small but persistent faction of extremists remains committed to supporting violent separatist efforts abroad.
The issue has long been sensitive in Canada, home to one of the world’s largest Sikh diasporas. While the overwhelming majority of Canadian Sikhs do not support violent separatism, government officials have wrestled with how to balance freedom of expression and association with the need to curb extremist activity. Critics have accused Ottawa of at times turning a blind eye to Khalistani militancy for fear of alienating segments of the Sikh community.
India, meanwhile, has repeatedly raised concerns with Canadian authorities over the presence of Khalistani sympathisers on Canadian soil. Tensions between New Delhi and Ottawa have periodically flared over the issue, with Indian officials urging stronger action against groups and individuals linked to separatist financing. Canada’s public acknowledgement of the problem is likely to be closely scrutinised in both capitals.
The Finance Ministry’s report emphasises that the fight against terrorist financing requires constant vigilance, particularly as extremist groups evolve their tactics. In recent years, authorities have noted a shift from organised fundraising campaigns to smaller, informal channels, including personal donations, community events, and in some cases online transfers. This makes detection and disruption more challenging, demanding improved coordination between intelligence agencies, law enforcement, and financial regulators.
Despite these difficulties, the government insists it remains committed to protecting Canada’s security and international reputation. “The continued presence of terrorist financing within our borders underscores the importance of robust countermeasures,” the report concludes, calling for closer monitoring of at-risk sectors and stronger international cooperation.
With the issue now officially acknowledged at the highest levels of government, attention is likely to turn to how Ottawa intends to act on its own findings. For Canada, the challenge lies not only in stopping money from reaching violent extremists but also in reassuring both domestic and international partners that it is serious about tackling the threat.
