The terrorist threat of the early 2000s was defined by religiously motivated groups—Al-Qaida, the Taliban, and later Daesh. These organizations mobilized thousands of “foreign fighters,” including Canadians, who traveled to conflict zones in Syria and Iraq for combat, fundraising, and propaganda. But the contemporary landscape is more fragmented and hybrid. Extremist threats now span jihadist networks, separatist movements, and ideologically motivated groups, often converging with organized crime. Unlike the hierarchical structures of Al-Qaida or Daesh, today’s extremist actors exploit diaspora communities, online networks, and financial loopholes across multiple jurisdictions. In this evolving landscape, separatist and identity-based movements are resurfacing. The Khalistan movement, long thought to have been relegated to history after its violent peak in India during the 1980s and 1990s, is now re-emerging in the context of global security debates. It provides a case study in how local grievances can find new life through transnational networks and diaspora activism. Canada’s 2025 National Risk Assessment on Money Laundering and Terrorist Financing explicitly highlights Khalistan-aligned outfits, including Babbar Khalsa International (BKI) and the International Sikh Youth Federation (ISYF), as entities that continue to attract diaspora funding. These groups are EU- and UN-listed as terrorist organizations. The Canadian report stresses that while terrorist financing remains low volume and low value, pro-Khalistan groups are “resorting to violent means” to sustain their cause. This places Canada in a difficult position: its large Sikh diaspora makes it a hub for legitimate political activism, but also a potential platform for extremist fundraising. The geopolitical impact is disproportionate—fueling diplomatic tensions with India, especially in the wake of the Nijjar killing in 2023. Canada thus provides a documented case study of how diaspora-based fundraising—through community networks, charities, and small donations—can sustain separatist movements even decades after militancy declined in the country of origin. This recognition is geopolitically significant. Canada has one of the world’s largest Sikh diasporas, and Ottawa has long struggled to balance domestic political sensitivities with its security obligations and its strategic relationship with India. By naming Khalistan-linked groups explicitly, Canada has acknowledged that its financial system and political environment can serve as a platform for transnational extremism. For India, this provides validation of long-standing accusations that the diaspora sustains the separatist cause abroad. For Canada, however, it creates diplomatic friction, placing its domestic multicultural framework under the scrutiny of a foreign power increasingly central to global geopolitics. The Khalistan question also illustrates a broader challenge in counterterrorism: the blurred lines between legitimate political activism, radical separatism, and violent extremism. Many Sikh organizations in the diaspora advocate peacefully for Sikh rights and recognition. Yet, a violent fringe exploits diaspora spaces for financing, propaganda, and recruitment. What complicates the matter further is the intersection with organized crime. Intelligence sources point to overlaps between Khalistan-linked extremist networks and criminal activities such as smuggling, extortion, and money laundering. These intersections provide resilience to extremist causes, embedding them within broader illicit economies that stretch far beyond South Asia. For Canada, the Khalistan issue risks straining its international partnerships. Ottawa has positioned itself as a leader in combating terrorist financing, but the persistence of Khalistan-linked groups raises questions about enforcement gaps. India has grown increasingly vocal, framing Canada as permissive toward separatist extremism—a narrative that has already escalated into diplomatic clashes, most visibly after the killing of Hardeep Singh Nijjar in 2023. For India, the revival of Khalistan-linked activity abroad represents both a domestic security challenge and a geopolitical one. While militancy within Punjab has been contained, the diaspora provides a symbolic and financial lifeline to the cause, complicating India’s external relations and forcing it to integrate counter-Khalistan policy into its broader foreign policy strategy. From a global security perspective, Khalistan is part of a broader trend of re-localized extremism: movements rooted in ethnic or regional grievances that plug into transnational funding, online propaganda, and criminal economies. These causes rarely match the global reach of Daesh or Al-Qaida, but they thrive in the gaps between domestic policy, diaspora politics, and international diplomacy. For intelligence agencies, Khalistan serves as a reminder that the terrorist threat is not monolithic. Extremism today can emerge from hybrid space. In this sense, the Khalistan case is not merely about India’s internal security. It is a geopolitical-security fault line, touching Canada’s domestic politics, India’s external posture, and the broader dynamics of how Western states manage diaspora-linked extremism in an era of globalized crime and decentralized radicalization.The re-emergence of Khalistan-linked extremism underscores the adaptive nature of terrorism. While global attention has often focused on jihadist organizations, the Khalistan issue shows that separatist movements—when combined with diaspora politics, illicit finance, and online radicalization—can resurface as significant security concerns. Across the Atlantic, Europe plays host to the same drama, though with a subtler script. The European Union lists BKI and ISYF as terrorist organizations, and any financial support to them is a crime under EU law. Yet the Khalistan cause has not disappeared from European soil. It is visible in the rallies of Sikhs for Justice, in the makeshift “referendums” staged in Brescia and Rome in 2022, where thousands lined up to mark a symbolic ballot for an independent Punjab. These were legal events, political theater rather than insurgent plotting, but they displayed a mobilization capacity that India follows closely. Italy’s police and intelligence services keep an eye on such gatherings, aware that activism can shade into fundraising, that political passion can conceal material support. Nothing comparable to Canada’s financing networks has been publicly documented in Italy or in Europe, yet the possibility lingers in the background, sharpened by small flashes of radicalism: graffiti, vandalism, the Gandhi statue in Milan defaced with pro-Khalistan slogans. This is the new face of extremism. It no longer marches in tight formations or holds territories with flags; it survives in hybrid spaces, half politics, half militancy. Diaspora donations, sometimes channeled through charities, small transfers through informal systems like hawala, online propaganda amplified to the scale of a global campaign—all of it too diffuse to crush, too political to ignore. Canada’s assessment exposed the mechanics clearly: small sums, scattered actors, big consequences. Europe sees the activism but not yet the financing, though the ingredients are there. The real danger lies not in the money itself but in the fallout. For Canada, Khalistan is a test of whether a multicultural society can draw a line between advocacy and extremism without alienating a community at the heart of its identity. For Europe, especially Italy, it is a question of vigilance: to act before diaspora politics tips into criminal finance, to uphold freedoms without tolerating covert militancy.