A scam exposed by BBC Wales in which overseas students are helped to cheat their way to University of Wales-validated degrees and visas is being investigated by the UK Border Agency.
Students are sold diplomas exempting them from work for MBAs, which then entitles them to apply for a UK visa.
Two staff at Rayat London College have been suspended and the registrar has resigned.
The University of Wales would not comment on the scam allegations.
Earlier this week it said it is to stop validating other institutions' degrees.
UK Immigration Minister Damian Green said: "It's fraud - it's clearly trying to create and exploit a loophole in the immigration system.
"Obviously we're aware of the investigations that you've been undergoing (at BBC Wales).
"If people are committing scams then they should be worried - we're after them."
Meanwhile the Welsh Liberal Democrats have expressed their "frustration and disappointment" that a request for an urgent question in the Senedd, calling on the education minister to make a statement on the matter, has been refused.
Aled Roberts, shadow education minister, said: "The issue of overseas students who are cheating their way into University of Wales accredited colleges to obtain visas is a matter that warrants urgent discussion."
Special two-year work permits for all overseas graduates in the UK are being phased out in April and foreign students are being tempted by offers to fraudulently obtain degrees before the deadline.
Undercover footage suggests students at the Rayat London College are being offered the chance to enrol on express MBA courses using fraudulent diplomas to ensure exemptions from much of the work.
BBC Wales' Week In Week Out programme has obtained evidence of plans to offer students advanced sight of an official University of Wales exam paper.
Covert filming shows one lecturer, Surya Medicherla, giving students tips on how to cheat in exams and how to deceive the UK Border Agency (UKBA).
In the footage, he warned the students not to be complacent about the agency.
"In some corners of your heart you are so happy because you are not studying anything but you are getting your PGD (postgraduate diploma)," he said.
"You are not really bothered about what you are going to write but these things will in future prove very costly so at least remember the subjects.
"Just please be careful, just getting the PSW (post study work visa) does not mean that we have fooled the UKBA - no, they are quite intelligent - they are more intelligent than what we are."
Mr Medicherla told BBC Wales it was never his intention to show students how to cheat.
The registrar of Rayat London College, Irvin Harris, is also co-director of the exam qualifications awarding company Professional Qualifications Management (PQM) Limited.
The programme has evidence that his scam would include an offer to hold examinations in which students can cheat in order to complete a 15-month qualification in under a week.
Mr Harris denies any allegations of wrongdoing, saying that he never encouraged anyone to cheat and was not responsible for the conduct of Mr Medicherla.
This week he resigned from his post with Rayat London College.
A spokesperson for the college said a lecturer and admissions officer had also been suspended.
It said it wished to disassociate itself from any alleged wrongdoing and had referred the matter to the police.
PQM Limited said it was a bona fide organisation with strict policies for examination and marking and denied any involvement in the matters under investigation.
Immigration lawyer Harjap Bhangal said those caught attempting to deceive the UKBA were likely to face prosecution.
"There's currently students serving prison sentences for trying to defraud the UKBA," he said.
"The consequences are jail and the risk of exposure.
"On top of that you may be deported and your passport taken - you might never see your passport again.
"If proceedings are taken in your home country you might not be allowed to leave and your dream of coming to the UK will be gone as you are restricted to living in your village."
The episode is likely to cause further embarrassment for the University of Wales, after an earlier BBC investigation revealed a college offering its courses in Malaysia was run by a pop star with two bogus degrees.
On Monday, the University of Wales announced that it would stop validating degrees from other institutions.
Vice-chancellor Medwin Hughes said the decision was in response to changes in higher education in Wales.
The university, whose chancellor is Prince Charles, was the second-largest degree awarding body in the UK with 70,000 students at 130 partner colleges around the world.
Following a highly critical report by the higher education watchdog, the QAA, the University of Wales said each of its partnerships would be reviewed.
However, it last inspected Rayat London College in July, shortly before the BBC investigation began, and validated its courses for a further five years.
The University of Wales says it has referred the allegations being made in the programme to South Wales Police, the Metropolitan Police and the UKBA.
It said it would be inappropriate for it to comment further.
Prof Sir Deian Hopkin, former vice-chancellor of London South Bank University, said the developments were worrying.
"If someone comes along and says a British degree can be bought and sold ... that's not good news."