The European Union has given Greece three months to fix its border controls, in a move that could allow other Schengen zone states to maintain internal border controls.
Two weeks ago, a draft report found that Greece had "seriously neglected" its obligations to control the external frontier of the border-free zone.
Some EU states have re-imposed border controls on a temporary basis.
More than 850,000 migrants and refugees arrived in Greece last year.
Around 80,000 have already crossed from Turkey in 2016. On Thursday Nato announced it would deploy ships in the Aegean to deter people-smugglers operating there.
Most migrants want to travel through Greece and make their way to Germany and other countries in northern Europe.
Germany and other states have been critical of Greece's ability to stem the flow.
Article 26 of the Schengen Borders Code allows countries to keep temporary border controls in place for a maximum of two years, "in exceptional circumstances".