Tongan police have told Australian officials that convicted criminals may have travelled to Australia after having their records wiped clean.
Tongan police commissioner Grant O'Fee says 172 people convicted in Tonga have obtained police clearance letters, allowing them to apply for visas overseas.
The New Zealand immigration minister says an estimated 40 of those people may currently be in New Zealand and some may have gained residency.
Others are believed to have made their way to Australia.
Australia's Immigration Department is conducting an inquiry.
A spokesperson says anyone who is found to have entered the country after being sentenced to a year or more in jail is likely to be deported.
Commissioner O'Fee says police officers in Tonga are being investigated in relation to the practice, which is believed to have happened in the 10 years to 2011.
New Zealand has put an immediate hold on Tongan visa applications that require police clearance.