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Customs investigations manager Bruce Berry said the investigation detected what is believed to be the largest tax evasion case involving smuggled cigarettes.
As a result of this investigation, the police have also restrained multiple properties, luxury cars and bank accounts.
An Auckland businessman was arrested by Customs investigators at Auckland Airport last Wednesday as he attempted to depart the country. The arrested man was charged with defrauding Customs revenue. Further charges and more arrests are likely.
The tax evaded by smuggling the 1.8 million cigarettes is almost $1.8m.
The investigation – named Operation Whitethorn – was a six-month operation that began after Customs identified a company suspected of smuggling cigarettes inside sea containers. A recent container inspection located 340,000 cigarettes hidden inside 12 metal cabinets.
Last week, Customs investigators carried out search warrants at multiple Auckland addresses, locating around 1.5 million cigarettes and five rubbish bags filled with cash.
Customs was assisted last week by the NZ Police Asset Recovery Unit, which restrained two properties worth several million dollars, two luxury cars, and several bank accounts.
It is the first time Customs has partnered with the unit to target those involved in revenue fraud.
"Customs has seen an increase in the commercial quantities of smuggled or misdeclared Chinese-branded cigarettes in recent years," Berry said.
"This investigation has uncovered the largest scale tobacco fraud to date, with the tax evasion already estimated to be at least $1.8 million.
"While it's okay to import cigarettes, smuggling or misdeclaring them to evade taxes is illegal. Customs will not hesitate to identify and take action against those who seek to financially benefit from such illegal activity, including restraining the assets of the worst offenders."
Detective Senior Sergeant Chris Allan, officer in charge of the Northern Asset Recovery Unit, said the seizures were the result of an excellent working relationship between Police and its partner agencies.
"This case demonstrates Police's commitment to tackling proceeds of crime," he said.
"Police will continue to work with our partners under the Criminal Proceeds [Recovery] Act 2009 to remove unlawfully derived assets across the spectrum of illegal profit-motivated activity."
If you have suspicions about someone involved in illegal smuggling, call 0800 4 CUSTOMS (0800 428 786) in confidence, or Crime stoppers (0800 555 111) anonymously.