In a landmark disclosure, Canada’s Department of Finance has formally recognised that certain Khalistani extremist groups—including Babbar Khalsa International and the International Sikh Youth Federation—have been raising funds domestically to support politically motivated violent extremism (PMVE) within the country. The findings appear in the newly released 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, which also flags other PMVE-designated groups such as Hamas and Hezbollah as receiving financial backing from sources rooted within Canada .

The report underscores the ideological motivations of these groups: their pursuit of “new political systems” or structures, often invoking religious rhetoric but fundamentally rooted in the drive for political self-determination rather than racial or ethnic superiority . It reveals that law enforcement and intelligence entities have observed domestic funding flows to these extremist organisations .

Financing mechanisms cited in the assessment span a wide range: abuse of money services businesses (MSBs) and banking systems, exploitation of cryptocurrencies, misuse of charitable and non-profit organisations (NPOs), as well as criminal activities . While the Khalistani groups previously enjoyed extensive fundraising networks across Canada, the report notes a shift toward smaller, ideologically aligned factions rather than tightly structured organisations .

These revelations echo earlier assessments by Canada’s premier intelligence agency—CSIS—regarding the use of Canadian soil by Khalistani extremists for planning, fundraising, and promoting violence targeting India.