Canada Gets a Third* Terrorism Financing Conviction
Just in time for our FATF review
Big news out of Canada yesterday. Khalilullah Yousuf pled guilty to terrorism charges. He was charged with financing (83.03), participation (83.13) and facilitation (83.19). According to Stewart Bell’s reporting, the prosecution sought (and received) a 12-year sentence. The activities occurred between March 2021 and July 2022. This case exemplifies many of the trends present in contemporary terrorism cases: a mix of methods, the inclusion of charitable causes, and some efforts at financial tradecraft. And of course, an international network of supporters and an undercover officer.
To raise funds, Yousuf claimed to be fundraising for Palestinians in Gaza and for Muslim religious events, and he solicited donations on crowdfunding sites such as GoFundMe. Those funds were diverted to an ISIL facilitator. He also donated money he obtained from unemployment insurance and COVID-19 benefits. In total, he sent more than $25,000 to ISIL and affiliated individuals. He initially sent the funds abroad using Western Union, MoneyGram, and PayPal, but these transfers were eventually blocked, so he switched to Bitcoin.
Terrorist financing through charities (and charitable causes) is a ubiquitous terrorist financing method. About 20% of terrorist groups raise money in this way, while about 4% of operational attacks are funded through charitable donations.
I’ve developed a whole typology of how terrorists exploit charitable causes. You can read about it in detail in the article above, in my book “Illicit Money,” or you can refer to our infographic for the main points. This was a “type 7” charitable abuse because no charities or nonprofit organizations were involved, only a charitable cause or cover story. Those of us who worked the old ISIL cases will remember this typology from all the money raised for “orphans”.
In their press release announcing his charges, the RCMP also thanked the Guardia Civil of Spain. While it’s unclear what their participation in the investigation was, it is worth noting that around the time of Yousuf’s activities, a jihadist network supporting ISIL in Afghanistan, the Middle East, Sahel, and the Maghreb and Europe was uncovered, and this also raised funds through cryptocurrencies. Yousuf sent funds to several different people for terrorist purposes, including an individual located in Palestine, one in the Maldives, one in the UK, and one in Spain.
A US criminal complaint also outlined how Yousuf and three other individuals (Mohammad David Hashimi, Abdullah At Taqi, and Seema Rahman) were involved in a financing network for ISIL. They used encrypted messaging to communicate and created a crowdfunding campaign to help the mujahideen. Some of these campaigns were informal, involving the sharing of a Bitcoin wallet address and a PayPal campaign, while others employed formal, platform-based campaigns.
This is only Canada’s third terrorist financing charge.* The first was Momin Khawaja, who was charged for his role in Operation CREVICE in the UK, and ultimately convicted of terrorism offences (including financing) in Canada. The second was Prapaharan Thambithurai, who was convicted of financing the LTTE. And depending on how you count, this might be our fourth conviction, because Awso Peshdary was convicted of financial facilitation. (A very similar charge in my view, and one that should be included in our count of terrorism financing convictions.) This is Canada’s first successful terrorism prosecution of 2025, and the 89th overall.
Terrorists are increasingly using cryptocurrency to raise and move funds. In my highly controversial article, I outline how and why this is happening, along with my method for establishing these metrics. In short, there has been a steady increase in financing through cryptocurrencies. However, as this case illustrates, traditional methods (such as Western Union, Banks, and PayPal) continue to be important avenues for illicit funds.
So what does this all mean for Canada? Well, first of all, it could not have come at a better time. Canada’s mutual evaluation by the FATF is scheduled to begin this fall, and for these evaluations, metrics are crucial. Increasing the number of successful prosecutions from 3 to 4 will be beneficial for Canada in demonstrating the effectiveness of its counterterrorist financing regime. It won’t be the only thing FATF looks at, but it will be a welcome increase in our numbers.
Secondly, this conviction sends a message to those who would seek to finance terrorism. Canada can, and will, both disrupt and prosecute individuals engaging in these types of activities. While the sentences in Canada are nothing compared to the United States (where sentences for terrorist financing and material support are regularly 20-30 years), in Canada, we generally see 5-7-year sentences. However, given that he was facing several charges, and the scope of activity that he was involved in, he received a 12-year sentence.
Ultimately, it highlights Canada’s ongoing successful engagement with international partners. This case involved the use of a U.S. undercover officer, which is one of the primary methods used to bring such cases to light. Canadian officials are pretty fortunate that they did not have to a) explain the use of a US undercover and justify their actions, and b) explain blockchain analytics to a judge in a terrorism financing case. The guilty plea saved a lot of time, money, and hassle. However, it also highlights a vulnerability for Canadian law enforcement, specifically its reliance on the United States. Can we still count on the FBI to do this kind of work under a Trump administration, and facing DOGE cuts? I think that ISIL investigations are probably the safest in the FBI’s portfolio, but I’m starting to have concerns about their ability to do this kind of work. And that will have implications for Canadian law enforcement.
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