Turkish entrepreneurs detained in Germany over money laundering allegations

Turkish businessmen and founders of Cologne Watch, Sadullah Y. and Abdullah Y., were detained at Dusseldorf Airport following allegations of laundering drug money through luxury watch sales.

The brothers, known for selling high-end watches to celebrities, face serious accusations of laundering proceeds from narcotics trafficking, according to German authorities.

Arrests linked to money laundering investigation

German authorities arrested the brothers on Oct. 7 as they arrived at Düsseldorf Airport from Istanbul. This followed a long-running investigation by the Federal Criminal Police Office (BKA) and Essen Customs Investigation Police into a criminal group allegedly using luxury watches to launder drug money.

Authorities claim that drug traffickers purchased high-value watches from the brothers’ stores in Cologne and Dusseldorf, using illicit funds generated from narcotics sales.

Luxury watches and drug money ties

The brothers’ stores, which cater to high-profile clients including footballers and Hollywood stars, became central to the investigation. The two were reportedly placed under surveillance after investigators identified their involvement in transactions tied to the laundering of drug money.

Authorities also believe the brothers played a key role in helping traffickers acquire luxury watches in exchange for cash from drug sales.

Property seized, accounts frozen

During a coordinated operation, customs and tax officials raided the brothers’ stores and homes across Germany. Three employees were also detained and several weapons, including long-barreled firearms and illegal ammunition, were confiscated.

Investigators also seized millions of euros worth of luxury watches, and the brothers’ assets, including bank accounts, were frozen.

Tax evasion allegations

In addition to the money laundering accusations, German authorities allege that Sadullah and Abdullah Y. were importing luxury watches from outside Europe without paying the required customs and sales taxes.

The tax evasion, involving the 19% import tax, adds to the charges already leveled against them. This is not the first time the brothers have faced trouble. In 2023, their flagship store on Benesis Street in Cologne was the target of a bomb attack.

They claimed that thieves detonated the store’s door to steal valuable watches, an incident which added to their public notoriety.

Dark side of luxury: Tool for money laundering 

Transnational criminal networks have discovered that these watches are not just status symbols but also effective tools for laundering money. A recent case in Türkiye has revealed how a criminal gang used luxury watches to launder illicit funds by exploiting airport security and the fragmented gray market. 

Case of call center scam 

• Background: A criminal gang based in Germany, operating a call center in Izmir, Türkiye, was recently put on trial. The gang, posing as police officers, defrauded elderly individuals in Munich, collecting money and valuables. 
• Money laundering method: The gang transported the stolen money to Türkiye by smuggling luxury watches through airports. They wore these high-value products, each worth millions, on their wrists, easily passing through airport customs without raising suspicion. 
• Final destination: Once in Türkiye, these watches were sold at local jewelers, converting the illicit funds into legitimate money – a classic case of money laundering. 

How is money laundered through watches? 

Luxury watches are ideal for laundering money because of their high value-to-weight ratio and the ease with which they can be transported across borders. Here’s how it works: 

• Step 1: Purchase luxury watches in one country using illicit funds. 
• Step 2: Smuggle the watches to another country by wearing them or carrying them in luggage. 
• Step 3: Sell the watches at local jewelers or on the gray market, converting them back into cash or integrating the money into the financial system. 

These steps are relatively easy to execute, making watches a preferred method for laundering sizeable sums of money.

The lack of oversight in the watch market, especially in the gray market, further facilitates this illicit activity.