Half right and half wrong. Any police officer can suka-suka screen any vehichle registration or IC number, that's the half-wrong part. However, the officer's ID will be recorded as the one doing the screening too, that's the half-right part. Any reason can be given for screening, from suspect of anything, e.g. suspected of being stolen vehicle or wanted person, to simply just routine spotcheck. Most important thing is, the police officer must not be caught using such powers for personal reasons. But that's just a cursory screen, wanted or not, got criminal record or not, reported missing person or stolen vehicle or not.
To go into particulars and details, only AIO and above can do that with an officially opened case file, including screening medical records.