Organised crime gangs are using the national disability insurance scheme to launder money, earn income and hide assets, law enforcement officials have warned parliament, seriously undermining probity in the $50bn program.

The Australian Criminal Intelligence Commission (ACIC) has told a review into NDIS integrity that criminals are paying cash kickbacks to participants and their families, and sometimes resorting to intimidation and threats of physical violence towards vulnerable people to rip off taxpayers.

As the government looks to stem unsustainable growth in the scheme in next month’s federal budget, ACIC officials told MPs that allied health professionals and “other trusted intermediaries” had allowed gangs to infiltrate the NDIS, including by preparing false or exaggerated documents to increase payments.

They warned the scale of organised crime cashing in was difficult to properly quantify but that the fraud is “significant and, in some cases, systemic”.

False and inflated support claims, payment requests submitted while individuals were in hospital or prison, and claims made against expired plans are contributing to the problem.

The ACIC said large cash withdrawals, asset purchases and fraudulent financial transactions are common, including efforts to obscure the origin of NDIS funds.

Worse, existing data on banned and suspended providers already reveals fraud convictions, tax problems and rorting of other government programs, all tools that could be used to identify serious risk from gangs.

“Weaknesses in provider suitability and screening can allow unsuitable or criminally‑linked providers to operate within the NDIS, increasing the risk that participants are exposed to poor‑quality care, exploitation, or services that are not delivered as intended,” ACIC officials said.

“Where oversight is limited and funding can be accessed without meaningful scrutiny, these risks are heightened, particularly for participants who rely heavily on providers to manage or deliver their supports.”

The most at-risk targets include NDIS participants from non-English speaking backgrounds, those without wide support networks and people with physical or cognitive impairments.

Rorters accessing the system are able to re-emerge to repeat the behaviour after being banned, due to poor surveillance systems.

The ACIC says better use of NDIS data should be considered, along with moves to require providers to register with the government.

Labor could use reforms to the NDIS in the 12 May budget to increase registration requirements for providers working in the NDIS, a change to the rules which would be complex and controversial.

A fraud taskforce is already at work in the NDIS.

The health minister, Mark Butler, is due to announce major changes on Wednesday.

The treasurer, Jim Chalmers, said on Monday cuts to the scheme would be “easily the most important part of the savings package that we will present on budget night”.

He is due to brief state and territory treasurers on the government’s plans on Tuesday.

The NDIS grew by more than 10.3% last year and is on track to cost $63bn by 2028-29. Labor wants to bring growth down to between 5% and 6% annually.

“The NDIS is growing too fast for Australians to afford,” Chalmers said.

On Monday, Guardian Australia reported efforts by state and territory governments to find out the breadth of federal Labor’s plans were rebuffed, adding to anxiety about the latest round of changes.

NDIS fraud is only a small part of organised crime activity in Australia: data from the Australian Institute of Criminology estimates the cost of criminal activity at up to $82.3bn in 2023-24, equivalent to 3.2% of GDP.