Australians may not equate illegal tobacco smuggling with drug trafficking or terrorism funding, but senior border security officials are warning it may be fuelling both.

Fairfax Media can also reveal that Australian Border Force investigations into organised crime are being stymied by the agency's lack of modern powers, including the ability to using tracking devices or, in some circumstances, conduct raids and arrest suspects without the backing of the federal police.

With border security a significant political issue – albeit focused mostly on people smuggling – the revelations put pressure on the federal government to respond to concerns about ABF powers and resourcing.

In an exclusive interview with Fairfax Media and the ABC's 7.30 program, Australian Federal Police assistant commissioner Wayne Buchhorn, who has been seconded to border force, has detailed his "significant" concerns that some of the proceeds of the booming illicit tobacco smuggling trade are flowing to extremist groups overseas.