The Iraqi embassy in Stockholm has issued thousands of passports based on false information
A Swedish migration official said that their faith in the embassy-issued documents was "nearly zero".
Sweden is the most popular destination in Europe for Iraqis, partly due to its relatively relaxed immigration laws.
The number of Iraqis seeking asylum arriving in Sweden in 2006 tripled from a year earlier, rising to nearly 9,000 people.
Immigration officials said that once in the country, many Iraqis applied for official documents issued by the Iraqi embassy in Stockholm using false identity documents.
"We have seen that [the embassy] regularly issues passports based on documents that we have rejected or deemed to be false," Bengt Hellstrom, of the Swedish migration board, told the Associated Press news agency.
The embassy provides identity documents for both Sweden and neighbouring Norway.
Iraq's ambassador to Sweden is reported to have recently told a Norwegian newspaper that the risk of passports being issued on fake identities was quite high.
"We have to go by the documentation that is presented without being able to check its authenticity in Iraq," the ambassador said.
A false passport can be used as the basis for an asylum application and may lead to citizenship being granted, officials say.
It is believed that some fake passports are sold on to citizens of other Middle Eastern countries who believe it is easier to obtain asylum with an Iraqi nationality.
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