Criminal syndicates are using counterfeiting networks in Malaysia to smuggle people into Australia, exploiting a relaxed visa agreement between the countries.

About 10,500 people from Malaysia are in Australia unlawfully — significantly more than any other country.

Malaysian passport holders enjoy an easier passage to Australia than people from almost anywhere else — a process that Department of Home Affairs officials have described as "the lightest touch."

But an ABC investigation has uncovered that people smugglers have helped nationals of other countries assume fake Malaysian identities so they can enter Australia the same way.

A Vietnamese man who spent five months in Malaysia awaiting documents to travel to Australia has spoken to the ABC about his ordeal.

Until last month, he was trapped with 37 other people from Vietnam in a hotel in Kuala Lumpur — all of whom had been promised safe passage to Australia and a job once they arrived.

"They said that it's easier here [in Malaysia] and I would not get my Australian visa if I submitted my application from Vietnam," the man told the ABC.

Citizens of most other ASEAN countries can travel to Malaysia without a visa. Once there, a passport can be fraudulently obtained in Malaysia for as little as $1300, according to Malaysian national security expert Andrin Raj.

Those ASEAN countries include Vietnam, Indonesia and the Philippines, whose citizens come under far more scrutiny when applying to travel to Australia than those from Malaysia.

This combination of an easy passage into Malaysia and an easy way to obtain false identification makes Malaysia the perfect staging ground for people smugglers, according to former Australian Border Force Commissioner Roman Quaedvlieg.

"It's a system that's corrupt inherently," Mr Quaedvlieg told the ABC.

Concerns terrorists could exploit system

Malaysian authorities have purged some corrupt officials involved in counterfeiting networks, but remain troubled by the scale of the problem and the threat it poses to national security.

Islamic State-linked extremists from the Philippines have been found living in the country with fake Malaysian identification, the New Straits Times reported in February.

Former ABF commissioner Roman Quaedvlieg said Australia's relationship with Malaysia could be exploited by extremists. ( AAP: Mick Tsikas )

Australian authorities are deeply concerned extremists from Indonesia and the Philippines may slip into the country using Malaysian identification, according to Mr Quaedvlieg.

It is understood some Malaysians with extremist links have already travelled to Australia on the same tourist visas.

In 2016, the ABF launched a crackdown on visa overstayers sparked by suspicious money transfers made by several Malaysian men working illegally on Victorian farms.

The men were suspected of sending money to Middle East-based extremists, and were deported, a Border Force source told the ABC.

Operation Bonasus was launched. Targeting overstayers, it uncovered widespread visa rorting, and almost 290 people were detained.

Stuck in a Malaysian hotel

People smugglers are still in business — two years after the launch of Bonasus — because of desperate men like Tran* (not his real name).

He is aged in his 20s and from the north-central Vietnamese province of Nghe An.

His wife is pregnant with their first child and Tran wanted to work in Australia so he could earn as much as possible to support his family.

One of the people smugglers who promised Tran passage into Australia. ( Supplied )

A family member introduced Tran to a smuggler who promised he could get him to Australia.

The smuggler told him he could work for 10 years in Australia if he used his services to travel to Malaysia first.

Tran arrived in Kuala Lumpur in March and hoped to be working in Australia only two weeks later.

But by August, he was still waiting in his $20 per night hotel.

His Malaysian tourist visa expired after a month, so he did not want to stray far from the hotel in case he was detained.

The smugglers — a Malaysian man and a Vietnamese man — were also staying in the hotel and had taken his Vietnamese passport, saying they needed it to organise his Malaysian documents.

Tran was trapped. He said 37 other Vietnamese men and women who also planned to work in Australia were in the hotel with him.

"I just wait and do nothing, because I have no passport and no money," he said, via a translator.

Tran said he paid the smugglers about $50,000 and said others paid similar amounts.

One of the 37 men stuck with Tran* in a Malaysian hotel. ( Supplied )

Some had taken out loans to pay the smugglers and would have to sell their houses in Vietnam to repay the loans if they were unable to travel to Australia and work.

Others had even brought the titles for their properties or vehicles to help pay for any additional costs, as they had spent all their cash just to get to Malaysia.

The smugglers made the group sign contracts that committed them to working on a farm in Australia for the syndicate after they arrived.

Tran said that it was well-known in his province there was little prospect of being able to travel to Australia legally from Vietnam, but the syndicate promised they had a way.

Men from Vietnam wait in a Malaysian hotel on the false hope they'll make their way to Australia. ( Supplied )

"They said that if I applied through their company, I would not need to worry about anything", he said.

Footage covertly filmed by Tran in July shows the Malaysian and Vietnamese organisers promising the group they would travel to Melbourne within days.

"You all have to work there, in the city of Melbourne," the Malaysian smuggler said in the video.

In the same video, the Vietnamese smuggler tries to assure the group that despite the delay, everything was going smoothly.

"All steps have been completed," he said. "It's time to reap what you sow."

But in late August, Tran and two others convinced the smugglers to hand back their passports so they could return to Vietnam. He flew home days later, and has not heard from the others about whether they made it to Australia.

The Malaysia issue

Malaysia's rise as a source country for people who are illegally in Australia has accelerated in recent years.

The ABF would not provide a historical breakdown of figures, but it is believed the number of Malaysian unlawful non-citizens has almost doubled since 2015. The ABF said the total number of overstayers has remained "relatively static" at about 63,000.

Malaysia is one of only eight countries whose citizens can apply for an Electronic Travel Authority visa online. Those visas can be granted in a matter of hours.

A busload of people are detained in Queensland following a raid as part of Operation Bonasus. ( Supplied: ABF )

James Copeman, the ABF field and removal operations commander, told the Joint Standing Committee on Migration in June that more than 300 people were refused entry to Australia as part of Bonasus.

He did not clarify why their entry was blocked, including whether any were found to have fraudulent passports.

Christine Dacey, a first assistant secretary at the Department of Home Affairs, told the same committee hearing that the ETAs were "probably the lightest touch visa that we offer".

"Malaysia is one of the countries that has access to it. I think it would be fair to say that we have identified ... that there is an issue there," she said.

Neither official outlined steps taken by the department — other than Bonasus, which is no longer running — to stop the flow of people arriving from Malaysia to work illegally in Australia.

A Department of Home Affairs insider, who could not be identified as he was speaking without authorisation, believes there has been a crackdown at airports

He said Home Affairs officers — particularly in Melbourne — are increasingly turning away Malaysian passport holders.

The insider said Malaysians were renowned for returning to Australia with a passport in a slightly different name only months after they had been deported for working illegally, using the same counterfeiting networks that had been exploited by people from other countries.

Fingerprints taken when they were first deported confirmed they were the same person.

Malaysian passport holders are increasingly being turned away at Australian airports. ( Supplied: ABF )

The insider said it was almost impossible to detect someone travelling with a fraudulently obtained passport, as Australian authorities were unable to determine the legitimacy of the documents used to grant it.

This underlined the department's push to increasingly use controversial biometric technology, he said, including facial recognition software, which gave them another tool to uncover fraud.

The department said it was working closely with the Malaysian government to prevent people using fraudulently obtained passports to enter Australia. Part of the measures put in place include employing Airline Liaison Officers in Malaysia to monitor flights to Australia.

"ALOs are highly skilled in document examination, impostor detection and passenger assessment," the ABF said.

The officers prevented the travel of 37 Malaysian nationals, the ABF said, but it could not clarify whether any of those individuals had fraudulently obtained passports.

The Malaysia embassy in Australia and officials in Malaysia declined to comment on what was being done to counteract passport fraud or people smuggling.

Migration agents: part of the problem and the solution.

Jason Wood, the chair of the Joint Standing Committee on Migration, believes organised criminals are involved in the movement of people from Malaysia to Australia and there is only so much Australian authorities can do to halt the flow.

His committee is currently investigating the role of migration agents, who often lodge applications for protection visas for Malaysians arriving in Australia on an ETA visa.

Mr Wood believes the applications represent an orchestrated scam that gives those who apply work rights in Australia until their claims are finalised, a process that can take eight years. The committee was alerted to the problem by migration agents.

Applications by Malaysians have increased from 4800 to 9060 in the past two years.

"Any time you can make money, organised crime groups will get involved and that's precisely what's happened here," Mr Wood said.

Migration agent Libby Hogarth said she told the Department of Home Affairs in 2016 that Malaysians were rorting ETA visas on a grand scale.

Ms Hogarth, a migration agent for more than 25 years who does much of her work at farms along the Murray River, dismisses the rhetoric about Operation Sovereign Borders putting people smugglers out of business.

Her first thought, after 15 Malaysians approached her on a visit to the Riverland in South Australia at least two years ago, was that "the people smugglers who have lost their work in Indonesia have moved on to a different model."