A known crime figure attended a customs Christmas party after being invited by officers who may still be in the job, the agency's acting boss has told a Senate hearing.
Under questioning from Liberal senator Michael Ronaldson, the acting chief executive Michael Puzzullo confirmed reports of the crime figure's attendance.
"Yes," he told an estimates hearing in Canberra on Tuesday.
But Mr Puzzullo refused to name the crime figure or reveal whether any of his staff had been stood down for inviting him.
Nor would he say whether others had been disciplined for failing to report the matter.
"That matter is a subject of both ongoing criminal investigation as well as potential disciplinary investigations and reviews as well," Mr Puzzullo said.
"Some of those officers have been dealt with through other proceedings first where there will be potentially far more serious consequences that they will face."
In some cases "active decisions" had been made to keep officers in place in the best interests of the criminal investigation.
Customs was synchronising its handling of the matter pending the outcome of investigations by the Australian Federal Police and the Australian Commission for Law Enforcement Integrity.
Mr Puzzullo said a very close eye was focused on certain figures and the AFP would move if there was any prospect of harm to the Australian community, including any drug shipments.
In December two customs officers, a quarantine service officer and five members of the public were charged after the discovery of a drug smuggling racket involving officials at Sydney airport.
But Mr Puzzullo said he did not believe there was a culture at customs that tolerated association with criminal groups.
Cabinet minister Joe Ludwig said customs wanted to manage the way forward.
"I think it would be unwise for the government to start intruding where the acting chief executive officer has the matter clearly in his sights," he told the hearing.