This morning the United States and Israel commenced their joint air war against the Islamic Republic of Iran. No matter how this war proceeds, it’s a game-changing event for the Middle East and beyond. Pentagon is terming it Operation EPIC FURY and President Donald Trump and Israeli Prime Minister Binyamin Netanyahu both have expressed that this war’s aim is regime change, not merely containing Iran’s nuclear weapons and missile programs.
This isn’t my first rodeo, moreover I witnessed up close NATO’s meandering 1999 air war against Serbia, which took 78 days of bombing to force Belgrade to heel, and that was with the substantial help of the Kosovo Liberation Army acting as NATO’s ground force. Iran is a much bigger and more substantial country and the track record of air power forcing regime change is historically poor. So count me skeptical that EPIC FURY will dislodge the mullahs and their clerico-fascist regime quickly – though I hope I’m wrong.
I’m not celebrating this new war – I don’t celebrate any war, really -- which nevertheless is well timed, since Top Secret Umbra this week was working on an intriguing story about how bad guys, including spies and terrorists, rely on luxury watches for money laundering and financing their operations. Iranian spies are in the middle of this. Therefore this niche account is relevant to today’s headline. So let’s proceed with the story.
I don’t have much interest in luxury watches. I’ve had a not particularly opulent Rolex for many years, but I seldom wear it, because who wears watches in 2026? Many people, it turns out. In fact, the luxury watch market has exploded in recent years. People with money view luxury watches not just as ornaments but as investments. You get into the market by dropping $50,000 or more on a watch, and rising prices haven’t hurt sales at all, rather the contrary.
I was unaware of this until an old friend in the U.S. Intelligence Community tipped me off to the use of luxury watches in espionage, going on right now. After all, luxury watches are an easy way to send the equivalent of cash, sometimes lots of cash, in a small package that’s difficult to trace, anywhere in the world. There’s a lot of less-than-legitimate uses for things like that.
The intelligence connection to watches isn’t new. There’s a popular Instagram feed devoted to watches and espionage, launched in 2021 by a former CIA officer, that gets a lot of hits, apparently from people who like watch-meets-spy photos. So, what’s the real story behind the connection between international intrigue and luxury watches?
For some guidance, I reached out to a couple other friends who are active in the luxury watch scene, and they told me a remarkable tale. I quickly learned that luxury watches are no longer just collectibles—they’ve become a powerful financial instrument for money laundering, tax evasion, and smuggling around the world. A well-coordinated network of high-end watch dealers, social media influencers, plus offshore entities spanning Dubai, Miami, and New York City, has transformed the luxury watch market into an unregulated multi-billion-dollar underground economy.
With gold exceeding $5,000 per ounce, smuggling precious-metal watches has become even more lucrative. Meanwhile, social media influencers hype up specific models, creating artificial value bubbles that make laundering money easier than ever. To avoid taxes, dealers resort to tactics like fake shipping records, watch dial swaps, smuggling mules, and using international watch events as underground trading hubs. This has become its own underground micro-economy.
Who’s behind this? The watch laundering pipeline runs through three major cities, each playing a distinct role:
• Dubai: The tax-free starting point where watches—often gold or platinum—are acquired in bulk, frequently using cash or crypto to avoid financial reporting.
• Miami: A key destination for Latin American money launderers, crypto millionaires, and offshore investors, where watches are flipped for profit, often in private, unregulated transactions.
• New York City: The final stop, where watches are funneled through auction houses, luxury boutiques, and high-profile collectors, making dirty money appear clean. To avoid NYC’s high taxes, dealers have found ways to falsify shipping records.
• And of course there’s Switzerland: The heart of the watch industry, where major dealers, collectors, and manufacturers congregate—often using watch fairs to conduct under-the-table deals, store watches tax-free, or quietly transfer ownership.
How do the players make this happen? International watch events have become key hubs for laundering money, smuggling, and tax evasion. The biggest events, including the annual Watches and Wonders held in Switzerland plus Miami’s numerous luxury watch shows, serve as backdrops for illicit deals where watches exchange hands quietly, off the books. These events are exploited to facilitate financial crimes internationally. Here’s how:
1. Tax-Free Storage – Dealers and collectors use these events as a way to move watches across borders without triggering import duties or VAT. Instead of officially selling the watch, it’s simply left behind in a Swiss vault or stored tax-free in Miami until a buyer picks it up later.
2. Off-the-Record Deals – Many of the biggest deals happen privately in hotel suites, away from prying eyes and official records. A buyer and seller can exchange a watch for cash, crypto, or assets, avoiding any paper trail.
3. Shows as Smuggling Opportunities – Dealers and mules bring watches to Switzerland or Miami, make a sale, and leave the watch behind, allowing international buyers to pick it up later without triggering customs inspections.
4. Money Laundering Through Fake Sales – Some dealers sell a watch to an overseas shell company under their control, creating a fake transaction that legitimizes illicit funds.
These events, while marketed as glamorous gatherings for watch enthusiasts, have become international money laundering pipelines, where millions in untaxed, undeclared luxury watches change hands every year.
How does the smuggling work to avoid U.S. Customs? That’s what mules are for. While many high-end watches are sold legally, a significant portion enters the United States through smuggling networks. Since carrying a luxury watch across the border does not trigger automatic customs duties, dealers often recruit mules to transport watches undetected. Here’s how it works:
• A dealer in Switzerland or Europe acquires several high-value watches.
• Instead of shipping them, the dealer finds a mule—often a tourist or associate—who wears two or three watches at once to avoid customs declarations.
• Upon arrival in the U.S., the mule removes the watches, hands them off to the dealer, and receives a small payout.
• The watches are then resold in Miami or New York at inflated, tax-free prices.
Switzerland, home to the world’s most prestigious watch brands, cares about the illicit smuggling of luxury watches, which in the long term harms the whole industry, and has tried to curb smuggling by introducing “watch passports”—digital certificates tied to each watch’s serial number. These passports track ownership, import history, and value. However, criminals have found ways to bypass this Swiss system:
• Dial swapping – Criminals remove the original watch dial and swap it with a cheaper version before smuggling it into the U.S. The original dial is then reinstalled after customs.
• Erasing serial numbers – Some watches have their serial numbers polished off to make them harder to trace.
• Underreporting values – Mules falsely declare watches as lower-value models, avoiding taxes.
Despite Swiss efforts, the sheer volume of watches moving through Dubai, Miami, and New York means that millions of dollars in undeclared watches still enter the U.S. every year. Moreover, the current high price of gold fuels the luxury watch smuggling market. With gold surpassing $5,000 per ounce – it closed at Friday at nearly $5,300, and the new Iran war may push it higher still -- high-end gold and platinum watches have become even more attractive for smuggling and tax evasion. Unlike raw gold, which is heavily monitored, a gold Rolex Daytona or Patek Philippe can hold over $200,000 in value while being small enough to fit in a pocket or be worn unnoticed. Why gold watches, in fact, are practically perfect for laundering money:
✔ Easy to transport – No need for banks or wire transfers; just wear it through customs.
✔ Holds & appreciates value – Gold watches often increase in price, allowing criminals to “store” illicit wealth.
✔ Can be melted down – Some dealers remelt gold watches into bars, erasing their origins before selling them for clean cash.
Inevitably, tax evasion enters the picture, given the amounts of illicit funds involved in this micro-economy. Which brings us to the “empty envelope” subterfuge. New York’s 8.875 percent luxury tax makes buying expensive watches costly. To avoid it, dealers have developed an easy loophole, here’s how it works:
• A buyer in NYC purchases a $500,000 watch.
• Instead of handing over the watch, the dealer “ships” an empty envelope to a fake out-of-state address.
• The dealer falsifies shipping records, claiming the sale took place in a tax-free state like Florida or Delaware.
• The buyer picks up the watch in person, avoiding $44,375 in NYC sales tax.
My friends in the know tell me that this trick is used on hundreds of transactions every year in New York alone, costing millions in lost tax revenue while allowing criminals to operate just below the radar.
This all amounts to a ticking financial time bomb. With gold at record highs, social media influencers manipulating markets, and international smuggling rings exploiting customs loopholes, the luxury watch industry has become one of the most sophisticated money laundering tools in the world. Despite efforts by Switzerland and U.S. authorities to crack down, the Dubai-Miami-NYC pipeline remains highly active. Unless stricter regulations are enforced, criminals will continue using gold watches as financial passports, tax-free assets, and untraceable money vaults. For now, in the world of luxury horology, time isn’t just money—it’s the ultimate cover for financial crime.
And who’s using this luxury watch scam to launder money internationally aside from criminals and scammers? Spies and terrorists, that’s who. It’s hardly new for intelligence services to use jewels to move money quickly and discreetly. During the Cold War, the KGB sometimes paid its most valuable agents abroad in diamonds, which are small, valuable, and difficult to trace. As this newsletter explained, the arch-traitor William Weisband, who compromised American and British signals intelligence secrets to Moscow at the dawn of the Cold War, making him one of the most damaging turncoats in U.S. history, seems to have been paid by his Soviet handlers in diamonds on occasion. It may not be a coincidence that Weisband’s brother Mark worked as a salesman for Harry Winston, the famous New York luxury jewelers – at the same time that Lona Cohen, the legendary KGB Illegal, was employed as a nanny by the Harry Winston family.
Intelligence Community friends tell me that nothing’s changed. Recently a friendly intelligence service disrupted an Iranian espionage network in the Persian Gulf that resulted in the detention of several spies for Tehran. Two of the arrested spies had several luxury watches on them – far more than required for personal use. A friend working in a Middle Eastern spy agency told me that a recent roll-up of several jihadists in his country netted – you guessed it – a bunch of luxury watches, on top of the guns and explosives the terrorists possessed. A high-ranking American spy informed me that the Miami hub for luxury watch smuggling is being exploited by Cuban and Russian intelligence too. Why not? It’s an easy way to move big money, fast, without oversight or records.
It’s time for an international crackdown on this fast-growing illegal trade before it becomes too big to disrupt. Our new war with Iran offers a compelling reason to institute firm international regulations and enforcement – American and Swiss authorities can’t curb this high-end crime wave alone. The clock’s ticking and bombs are dropping.