Arnold Schwarzenegger was detained by police and held for several hours at an airport in Munich, Germany on Wednesday.
The Hollywood star was stopped by customs agents and was found to be carrying an undeclared luxury Audemars Piguet watch worth tens of thousands of dollars.
Schwarzenegger later described the ordeal as an “incompetent shakedown” over a Swiss wristwatch.
The Terminator star intended to sell the custom-made watch at a charity auction in his native Austria.
However, he was taken aside by customs officials for failing to declare the expensive item.
Police in Germany say they have opened criminal tax proceedings against the actor.
“We have initiated criminal tax proceedings,” Thomas Meister, a spokesperson for the customs office, told the German news outlet Bild.
“The watch should have been registered because it is an import.”
The actor says he was never asked to fill out any forms to declare the custom Audemars Piguet watch, basic models of which start at around $30,000.
He was cooperative throughout the entire process, which he described as a scene from a comedy movie.
Schwarzenegger, 76, agreed to pay the duty on the item.
However, customs officers struggled with a credit card machine for an hour before taking him to a bank to get cash from an ATM.
But the ATM’s limit was too low, and the bank was closed, so he was brought back to the customs office where a working credit card machine was finally found.
The entire sequence lasted about three hours.
“He was never asked to fill out a declaration form and he answered every question from customs officers honestly,” a source told The New York Post.
“He cooperated at every step even though it was an incompetent shakedown, a total comedy of errors that would make a very funny cop movie,” the source continued.
Later, the Predator star joked about the ordeal at the Schwarzenegger Climate Initiative auction in Kitzbühel, Austria, where the watch was sold for nearly $300,000.
“Can you even believe that all of a sudden I was in handcuffs? I was in handcuffs!” he joked.
“Not because of the watch or because of the customs office, but I had a hot night with my girlfriend Heather last night.”
Schwarzenegger was the Republican governor of California from 2003 to 2011.
He later became a vocal critic of President Donald Trump.
The actor’s climate group seeks to raise “awareness of the climate crisis and the urgent need for action every day.”