Canada’s financial sector has become an “open and accessible” ATM for foreign terrorist organizations, a new Department of Finance report reveals, exposing a shocking national security vulnerability.
Canada has become a fundraising playground for overseas terrorist groups.
Entitled 2025 Assessment of Money Laundering and Terrorist Financing Risks in Canada, the report indicates a growing number of overseas terrorist groups are actively using Canada to acquire funding through illicit activities.
A number of these groups are engaging in politically-motivated violent extremism, as well as religious and ideologically-motivated extremism.
“Several terrorist entities listed under the Criminal Code in Canada that fall under the PMVE category, such as Hamas, Hezbollah, and the Khalistani violent extremist groups Babbar Khalsa International and the International Sikh Youth Federation, have been observed by law enforcement and intelligence agencies to receive financial support originating from Canada,” reads the report.
These groups view Canada as “an attractive source, destination, and transit point for proceeds of crime” through “large-scale and sophisticated money laundering operations.”
Specialized third parties provide money laundering services in exchange for commissions, fees, or other benefits.
“FINTRAC’s 2022 Operational Alert on Terrorist Activity Financing identified Hezbollah as the second most frequently identified international terrorist entity to receive outgoing Canadian funds,” it said.
Lebanese-based Hezbollah has long funded its terrorist activities through the international drug trade, using Islamic money brokers called hawalas to transfer money earned in Canada overseas.
“Both Hamas and Hezbollah are known to use MSBs (money service businesses,) especially IVTS (Informal value transfer system) such as hawalas to move money across borders. Hezbollah, in particular, is known to use Lebanon’s banking sector to maintain their account holdings,” the report continued.
“Hezbollah remains a highly active global player in the cocaine, heroin, fentanyl, and captagon trades, with trafficking networks spanning Latin America, Canada, and the US.”
Additionally, Hezbollah is active in the trade of stolen vehicles, a major crisis across Canada, with claims increasing 254% nationally between 2018 and 2023.
“American officials have observed Hezbollah buying used cars in North America and shipping them for resale through jurisdictions …. after which proceeds are transported to Lebanon by way of couriers,” it said.
“The Port of Montréal is a known link where luxury vehicles are shipped to Lebanon, financially supporting Hezbollah.”
Terrorist groups also exploit crowdfunding, cryptocurrencies, and non-profit organizations for financial gain.
“Fraud remains a dynamic and growing threat increasingly enabled by new technologies, such as artificial intelligence, and mis- and disinformation,” the report states.
“There is also a growing nexus between transnational organized crime and terrorism, including terrorist actors who leverage organized crime networks for support, and OCGs that can carry out terrorist activities. The Government of Canada continues to develop risk-based responses to protect Canadians and the Canadian financial system.”