Arnold Schwarzenegger Detained In Munich Over 'Unregistered' Watch, Taken to ATM

Arnold Schwarzenegger's known for his gun-toting characters ... but it was actually a benign watch that caused him problems at an airport Wednesday -- and the aftermath was a freaking mess.

The actor-turned-politician was held at the Munich Airport on Wednesday after trying to take an "unregistered" luxury watch through customs ... the Terminator didn't try to fight his way out of this one ... instead being spotted calmly hanging with customs agents.

Sources with direct knowledge tell TMZ ... customs detained AS for three hours for traveling with a watch he owns -- one he might auction tomorrow in Austria.

They say Arnold was never asked to fill out a declaration form, but once he got to customs he was hit with what they describe as an "incompetent shakedown."

But, the former bodybuilding champ didn't make a fuss ... agreeing to prepay potential taxes on the watch -- again, a watch he already owns -- in order to get on with his day.

Authorities tried to have Arnold use a credit card machine for an hour ... but failure after failure forced the customs agents to take Schwarzenegger to a bank so he could withdraw cash from an ATM.

That should've been the end of the story ... except the ATM had too low a limit -- the taxes ended up costing AS $10,613 -- and the bank was closed too! The group headed back to the airport, and another officer brought a new, working credit card machine.

Our sources say the watch will still likely be auctioned off tomorrow for the Schwarzenegger Climate Initiative -- a nonprofit dedicated to supporting clean energy efforts worldwide.

A spokesperson for the Munich Main Customs Office says it's simple, telling a local German outlet they've initiated criminal proceedings because the watch is an import staying in the EU -- it has to be declared.

As for why it took so long, the spokesperson explained the rest of Arnie's luggage had to be checked ... and that takes time.