Two men were in custody last night after they hijacked a taxi and forced the driver to bring them across the border.
Gardai were today planning to search for a gun which the men claimed they had when they took control of the car.
PSNI officers last night forced the cab to stop near Keady, Co Armagh, after it was hijacked in Castleblayney, Co Monaghan.
Gardai were involved in a high-speed chase after the cab, but had to stop once it crossed the Border. The driver involved, Pat Duffy, was not physically harmed.
Mr Duffy said he was "too upset" to talk about his ordeal when contacted last night. A relative said: "He was very shocked and doesn't want to talk about it, in view of the ongoing police and garda investigations."
The drama unfolded after gardai raided a house in the Ard na Lorgan estate on the outskirts of Castleblayney at about 8.30pm on Monday as part of an operation targeting local criminals.
Officers recovered a firearm at the house and arrested a 38-year-old local woman.
Two male associates of the woman, aged 19 and 39 with addresses in the area, arrived at the house in a cab as the search was ongoing.
When gardai moved to arrest one of the men, the other claimed he was in possession of a gun and would shoot somebody if his associate was not released.
Although it is understood no gun was produced, the arresting gardai took no chances and let the man go.
The two men then forced the driver to take them away from the scene. Despite giving chase, gardai were unable to intercept the cab before it crossed the border and immediately alerted the PSNI, which mounted a roadblock to stop the car. No firearm was found when the cab was forced to stop near Keady at about 8.45pm.
Garda sources said a number of items, believed to be cans of beer, were thrown from the cab shortly before it crossed the border. However, extensive searches by gardai yesterday failed to locate any firearm.
"We were searching for anything which may have been tossed from the hijacked car before the vehicle crossed the border," a garda source said.
Officers confirmed that the investigation was in no way linked to dissident activity and was solely related to local criminal activity.
The woman was being questioned last night under Section 30 of the Offences Against the State Act at Castleblayney Garda Station, and can be held for 72 hours.
The two men were being held at Armagh Police Station and can be questioned for 36 hours.
Locals last night spoke of their shock at the hijacking, which happened in a 120-house residential estate, the majority of whose residents are young couples with children.
Town councillor James Cunningham said: "This incident has shocked the local community and residents have expressed grave concerns over the fact that young children were playing on the estate when the incident took place, and their safety was put at risk."