The Opposition chief and former deputy prime minister said although he had no direct involvement with the "secretive" team when he was serving in the Government between 1982 and 1998, he had heard about it.
"This was a group that was operating outside the scope of legitimate structure," claimed Anwar, the 210th witness to testify before the RCI.
He said he had learnt during his term in the Government that this secretive taskforce was set up in the early 1970s when Tun Abdul Razak Hussein was Prime Minister and Tun Datu Mustapha Harun was Sabah chief minister.
Responding to questions from conducting officer Manoj Kurup, he said the secretive taskforce was in response to the influx of Filipino nationals into the state fleeing the southern Philippines insurgency.
Anwar said the secretive group he was referring to was not the Federal Special Taskforce on Sabah illegal immigrants that was set up in the 1980s.
He said he believed the secretive taskforce had never been disbanded.
"It began under Tun Razak, and continued under under Tun Dr Mahathir Mohamad, Tun Abdullah Badawi and Datuk Seri Najib Tun Razak. But it has to stop somewhere," he added.
Anwar said he was never involved or officially briefed about the secretive taskforce nor was he invited to sit in during the meetings of National Security Council chaired by the prime minister.
"I would disagree to any suggestion that the prime minister was unaware of this operation. If it involved 5,000 documents, then perhaps yes. But we are talking about hundreds of thousands here," he added.
Questioned by commission chairman Tan Sri Steve Shim that the RCI had heard of evidence that Sabah's population had grown unusually during the 1990-1995 period coinciding with Umno's expansion into the state, Anwar said any political party would do whatever possible within the law to increase its influence.
Anwar, who was Umno vice-president at that time and eventually became its deputy president, said there was never any discussion about a project to issue identity cards to foreigners in Sabah at the Umno supreme council meetings.