A "border corridor" of closer co-operation could be established between police forces north and south, senior officers said.
New accountability arrangements and legislation would need to be drawn up, PSNI chief constable George Hamilton said.
Garda Commissioner Noirin O'Sullivan also supported efforts to improve policing along the border after the killing of gardai Adrian Donohoe and Tony Golden in recent years.
Fuel launderers and cigarette smugglers have plied the area for decades.
Mr Hamilton said: "Anything that can be offered to add to the toolbox is welcome but there needs to be a practical and pragmatic outworking of that."
He told a meeting of British and Irish politicians from the British Irish Parliamentary Assembly (BIPA) in Cheltenham that his force had stringent accountability mechanisms.
The senior officer referred to the dispute over accountability which delayed the work of the National Crime Agency (NCA) in Northern Ireland.
He added: "The corridor itself in principle sounds like a sensible idea but in pragmatic, practical terms there are issues around legislation and accountability.
"If you lawmakers can sort it out between yourselves that is great, it is not really a matter for policing. There are policy and legislative issues that would have to be addressed."
He said police numbers were under pressure.
"We need to do things differently in order to maintain the ground we have taken in public confidence over the last decade or so."
The number of border area fuel laundering plants and filling stations selling illicit fuel is alarming, a previous report from cross-border political body BIPA said.
Garda Commissioner Noirin O'Sullivan supported her Northern Ireland counterpart.
She said: "Co-operation in the border corridor helps, anything that can help enhance co-operation must be helpful."
She said it should be focused and co-ordinated and pointed out that each force was accountable to justice ministers.
Mr Hamilton's comments earlier this year about the Provisional IRA following a killing by members of the group sparked near-collapse of the Assembly.
He said: "The assessment of paramilitary groups cannot be allowed to become a distraction. As police services we target the crime not the badge that those involved in it claim to wear or claim to have worn in the past.
"It is individual members that present an ongoing threat, not the groups as a whole."
