Canada’s Own Report Exposes Khalistani Terror Financing; Links Found With Hamas and Hezbollah

By Editor in Chief Last updated Sep 7, 2025

In a significant development, Canada’s Finance Department has for the first time publicly acknowledged the presence and funding networks of Khalistani extremist groups operating from within its borders.

What had long been dismissed as allegations by India has now been confirmed by Ottawa’s own assessment, which raises red flags about the misuse of Canada’s financial and charitable systems to fuel extremist activities abroad.

The assessment — focused on money laundering and terrorist financing risks — admits that outlawed Khalistani groups such as Babbar Khalsa International (BKI), the International Sikh Youth Federation (ISYF), and Sikhs for Justice (SFJ) have been raising funds on Canadian soil.

These funds, according to law enforcement and intelligence observations, have supported politically motivated violent extremism (PMVE). The report also noted similar financing links between Canada-based networks and international terror organizations like Hamas and Hezbollah.

Khalistani Groups Named in the Report

Several terrorist entities already listed under Canada’s Criminal Code fall under the PMVE category, including:

Babbar Khalsa International (BKI): Founded in the late 1970s, BKI was one of the most violent Khalistani terror outfits responsible for assassinations, targeted killings, and, most notably, the 1985 Air India Flight 182 bombing off the coast of Ireland, which killed 329 people.
International Sikh Youth Federation (ISYF): Established in 1984 following Operation Blue Star, ISYF has been involved in militant training, arms procurement, and funding extremist activities abroad.
Sikhs for Justice (SFJ): Banned in India in 2019 under the Unlawful Activities (Prevention) Act (UAPA), SFJ has spearheaded propaganda campaigns, including the so-called “Referendum 2020,” pushing for Khalistan — a separate Sikh homeland carved out of India’s Punjab state.

India has repeatedly highlighted these groups’ anti-India activities, from targeted killings of Hindu leaders in Punjab to radicalisation efforts among Sikh youth abroad. Despite being proscribed in India, they continue to find sympathisers and financial backers within Canada’s Sikh diaspora.

How These Groups Are Funded

The Canadian report reveals that extremist outfits have diversified their financing models, tapping into:

Misuse of charitable trusts and non-profit organisations, often under the guise of humanitarian or religious causes.
Criminal activities such as drug trafficking, auto theft, and smuggling.
Modern methods like crowdfunding platforms and cryptocurrencies.
Abuse of financial channels, including money service businesses (MSBs) and traditional banks.

The report acknowledged that although the extensive fundraising networks of the 1980s and 1990s have fragmented, smaller groups and individuals with allegiance to Khalistan continue to sustain the extremist movement.

Political Silence and Global Implications

For years, India has accused successive Canadian governments of turning a blind eye to these activities. Former Prime Minister Justin Trudeau was frequently criticised for being soft on Khalistani extremists due to domestic political compulsions, especially his reliance on diaspora votes.

With Mark Carney taking over as Prime Minister, the focus is now on whether his government will take corrective measures or continue with the status quo.

India, meanwhile, continues to battle remnants of Khalistani terrorism on its soil. In Punjab, local police and security agencies have foiled multiple terror plots in recent years, arresting militants linked to Pakistan-based handlers and Canadian networks.

The revival of Khalistani propaganda, often orchestrated online from abroad, remains a pressing security challenge for New Delhi.

Comparative Analysis: India vs. Canada on Handling Khalistani Extremists

India’s Approach (UAPA – Unlawful Activities (Prevention) Act, 1967):

India has designated groups like BKI, ISYF, and SFJ as terrorist organisations under UAPA.
UAPA allows the ban of organisations, freezing of assets, and arrest of members associated with these outfits.
India actively prosecutes cases involving Khalistani operatives, including charges of terror financing, conspiracy, targeted killings, and foreign-sponsored terror plots.
Agencies like the NIA (National Investigation Agency) and Punjab Police run continuous operations to dismantle sleeper cells, seize arms, and intercept foreign funding routed via hawala networks and cryptocurrency.

Canada’s Approach (Criminal Code of Canada, Section 83.05):

BKI and ISYF are formally listed terrorist entities, but enforcement has been limited in practice.
While the groups are technically outlawed, diaspora-linked sympathisers continue to organise events, rallies, and fundraising campaigns in the name of “human rights” or “self-determination.”
SFJ remains unbanned in Canada, despite being outlawed in India and known for orchestrating separatist propaganda.
Canadian law enforcement has documented extremist financing but has often refrained from strong punitive action, citing “freedom of speech” protections.

Key Contrast:

India treats Khalistani extremism as an immediate national security threat with zero tolerance, while Canada treats it largely as a political and diaspora-sensitive issue, leading to limited enforcement despite acknowledging risks.
India prosecutes individuals and dismantles funding networks, whereas Canada often stops short at “monitoring” and “reporting,” resulting in a haven for groups already banned elsewhere.

Timeline: Key Milestones in Khalistani Terrorism (1980s–Present)

1981–1984: The Khalistan movement intensifies in Punjab, leading to widespread violence and assassinations of political leaders.
June 1984: Operation Blue Star — Indian Army storms the Golden Temple in Amritsar to flush out militants led by Jarnail Singh Bhindranwale. The operation triggers a global wave of anger among radical Sikh groups.
October 1984: Assassination of Prime Minister Indira Gandhi by her Sikh bodyguards, sparking anti-Sikh riots across India.
1985: Air India Flight 182 bombing — orchestrated by Babbar Khalsa International, killing 329 people, mostly Canadian citizens of Indian origin. This remains the deadliest act of aviation terrorism before 9/11.
1990s: ISYF and BKI carry out targeted killings, bombings, and maintain overseas funding networks across Canada, the UK, Germany, and Pakistan.
2000s: Decline of large-scale violence in Punjab, but sleeper cells remain active, often directed by Pakistan’s ISI.
2010s: Propaganda shifts to the digital space. Groups like Sikhs for Justice (SFJ) emerge, launching campaigns such as “Referendum 2020.”
2019: India formally bans SFJ under UAPA, citing its role in radicalisation, separatist propaganda, and terror financing.
2020s: Punjab Police and NIA bust multiple terror modules linked to Canada- and Pakistan-based handlers. Recoveries include arms, RDX, and hawala-linked funds.
2025: Canada’s Finance Department admits that Khalistani extremist groups continue to exploit financial loopholes and diaspora networks in Canada, validating India’s long-standing concerns.

The Canadian Finance Department’s admission effectively validates India’s longstanding concerns — that Canada has become a hub for Khalistani terror financing and propaganda.

With Ottawa now openly acknowledging the problem, pressure is mounting on Prime Minister Mark Carney’s government to move beyond political hesitation and adopt a counter-terror framework that aligns with global security obligations.

For India, the revelation underscores the urgent need for tighter international cooperation to choke funding sources and propaganda platforms that sustain separatist extremism.

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