Facebook could be fined if Australians' personal information was given to controversial researchers Cambridge Analytica, the privacy watchdog says.
Australian Information and Privacy Commissioner Timothy Pilgrim says he is aware profile information was taken and used without authorisation.
"My office is making inquiries with Facebook to ascertain whether any personal information of Australians was involved," Mr Pilgrim said on Tuesday.
"I will consider Facebook's response and whether any further regulatory action is required."
Cambridge Analytica is facing claims it used data from 50 million Facebook users to develop controversial political campaigns for Donald Trump and others.
The Privacy Act allows the commissioner to apply to the courts for a civil penalty order if it finds serious breaches of the law.
Facebook has hired a digital forensics firm to audit Cambridge Analytica, which allegedly used data from a personality quiz to create political campaign tools.
"If this data still exists, it would be a grave violation of Facebook's policies and an unacceptable violation of trust and the commitments these groups made," Facebook said in a statement.
But Facebook hit back at claims it was a "data breach", saying users willingly handed over their information, and the information of their friends.
"Everyone involved gave their consent. People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked," Facebook said.
Communications Minister Mitch Fifield told parliament on Monday he would seek advice on laws preventing companies illegally accessing Australians' private information.
Cambridge Analytica is understood to have met with the Liberal party in a bid to sell their services in Australia.
Labor's national security spokesman Mark Dreyfus said digital platforms have to comply with privacy laws.
"I want to hear from Facebook whether it's anyone in Australia who has had their data removed in this way," he told ABC radio.
Greens senator Jordon Steele-John says Privacy Act exemptions for political parties and members of parliament should be removed in the interest of Australian democracy.
"When we're talking about data mining on this scale and its application to voter-targeting, we're talking about a very real threat to the integrity of Australian elections," Senator Steele-John said.
"Facebook allowed, and possibly still allows, data mining or harvesting on this scale to go on."
UK Information Commissioner Elizabeth Denham is also investigating the breach, promising it will be "far reaching" and any criminal or civil enforcement actions arising from it would be "pursued vigorously".
