Spanish police arrested two suspected members of the Real IRA splinter group in the southern city of Malaga for allegedly attempting to smuggle 500,000 packets of cigarettes to Britain, the Interior Ministry said Sunday.

The men, one from Ireland the other from Northern Ireland, were being held on suspicion of attempting to smuggle tobacco after police swooped on two trucks carrying the cigarettes, the ministry said in a statement.

The Real IRA claimed responsibility for the Aug. 15, 1998, car bomb attack on the Northern Irish town of Omagh, where 29 people were killed and more than 300 wounded.

Authorities said they had conducted a two-year investigation before arresting the two, who the police identified as Thomas Philip Cawley, of Dublin, and Aaron William Jordan, of Lisburn.

During the investigation, police determined that several British citizens from Northern Ireland had taken up residence on Spain's south coast and were suspected of "collaborating directly" with armed groups linked to the Real IRA.

Police investigators believe the money raised by selling cigarettes smuggled from Spain to Britain — where tax on tobacco makes them considerably more expensive — could have been used to finance activities linked to suspected terrorism, the ministry said.

One truck was loaded with 250,000 packets of cigarettes and the other contained 248,000, the total value of which was estimated to be more than $1.27 million, the ministry said.

An average pack of cigarettes in Spain costs $3.70 whereas in England they cost $9.50.

The cigarettes had entered southern Spain by sea through the Costa del Sol resort coastline and had then been transported to a warehouse in Malaga from where the smuggling operation was organized, the statement said.

Police had searched four homes on the Mediterranean coast and seized money and documents. Further detentions were possible.

Both suspects were taken to a police station in Madrid for further questioning.