Authorities said the tanker was carrying 131 Sri Lankans when it was intercepted on Tuesday.
There were 98 men, 24 women, four boys and five girls.
Three Indonesians and four Malaysians on a fishing boat used to transport the migrants to the vessel were also arrested.
Malaysia’s national police chief Mohamad Fuzi Harun said the large-scale and cunning human smuggling syndicate had been operating for a year and had connections in New Zealand, as well as in Sri Lanka, Australia, Indonesia and Malaysia.
Immigration Minister Ian Lees-Galloway has thanked Malaysian authorities for their work, saying the interception sent a clear message to people smugglers.
Mr Lees-Galloway said lives had been put at extreme risk.
He said the act was not tolerated by New Zealand and the exploitation of the individuals on board was repugnant.