The Karmapa's office has explained this as cash donations from Tibetans in China. Still, over the past week, many in India have fervently accused the Karmapa of being a Chinese spy. Tibetans in India have just as fervently defended their religious leader.

The accusations have been leveled not just by the media, but also by senior and influential political figures. B. Raman, a former intelligence officer and top bureaucrat in the Indian government, writes that the Karmapa's "escape to India was probably under a long-term Chinese intelligence operation to use him to influence events relating to Tibet after the death of the Dalai Lama." Mr. Raman here refers to the defection of the Karmapa in 2000 from Chinese-controlled Tibet to India.

These accusations reflect New Delhi's growing anxiety about its strained relationship with Beijing. But India must also appreciate that Tibetans aren't any friendlier with Beijing than they were when the Dalai Lama fled Tibet in 1959 and found asylum in northern India.

What are these Indian suspicions? First, there are doubts that the Tibetan community in India could pose a liability. After all, after the death of the present Dalai Lama, couldn't these Tibetans, under the influence of this Karmapa, become a Trojan horse—abandon their political struggle and run into the open arms of China? The underlying assumption here is that Tibetans are blind followers of religious leaders. To outsiders, Tibetans' emotional response to the latest media coverage confirms that their piety borders on religious fundamentalism.

Second, and more specifically, the Karmapa's lack of vocal opposition to Beijing since his defection, as well as the Chinese government's reluctance to demonize him as they do the Dalai Lama, has raised eyebrows in India. The fear is that the Karmapa could well turn out to be a Chinese agent and turn other Tibetans in northern India into Chinese agents too.

But the same could be said of all senior Tibetan lamas. None of them makes frequent anti-Chinese speeches or leads political campaigns, because this has always been a task for the Dalai Lama. In any case, if the Karmapa were a planted agent, wouldn't the Chinese have encouraged him to camouflage himself as some firebrand activist? And why would Beijing even pick a Tibetan to be a spy? Tibetans in India usually don't have citizenship, or access to New Delhi's top echelons of power.

In fact, the thought that the Karmapa's 2000 escape was part of some "long-term Chinese operation" is completely misguided. Since 1959, the single most important failure for Chinese policy in Tibet has not been the protests but the Karmapa's defection.

When Beijing installed him as a boy in 1992 in the Tsurphu monastery, the traditional abode of the Karmapas, it was a major propaganda coup. The Chinese intended for him to stay in Tibet and endorse their message of stability and unity. Now that he has fled, not a single senior Tibetan lama remains under the Communist Party's control.

It's understandable that any story involving $1.6 million in cash would make for a sensation in India. For the press, it revived a prejudice held in India in the days before liberalization, when capital controls were tight, that foreign currency equaled criminality. It also may have seemed out of place for Tibetan refugees in India to have all this cash.

But times have changed. The flow of foreign cash in India is no longer suspicious in itself. And Tibetans now have great access to both global remittances and donations.

If India wants to point a finger here, it should point it at itself. Tibetan refugees can rarely become Indian citizens and hence face complex regulations regarding the international transfer of money. That they often have no choice but to resort to cash dealings is an open secret.

New Delhi should help change this, because these donations won't stop anytime soon. In fact, these donations come not just from the West, but also increasingly from Tibet. The Karmapa has thousands of followers there who, because of an improving Tibetan economy, have more disposable income to offer as remittances to family members or donations.

The funny thing is that even Beijing is suspicious about these remittances and donations from Tibet to Tibetans on the other side of the border. Neither China nor India is happy. And it's the lamas who are caught in the middle.

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Mr. Shakya is a professor at the Institute of Asian Research, University of British Columbia, Canada.