Police have arrested three people at Sydney's Centennial Park, with a witness telling the ABC she saw officers holding their guns to a man's head.
New South Wales Police said the operation was planned, and not terror related.
Several bullet-like holes could be seen in a vehicle at the scene, in the city's affluent eastern suburbs, and police said they used "non-lethal projectiles".
Other witnesses said they heard loud bangs.
A witness told the ABC she saw police officers wearing balaclavas.
"I saw two tradies and one was being arrested and there were guns to his head," she said.
"It looked really scary. They were searching the car."
The incident happened about 100 metres from the park's main cafe. The area is a popular location for junior sport and people exercising.
Police used 'non-lethal projectiles'
Detective acting Superintendent Damien Beaufils said two of the men arrested had firearms, while the other had about $500,000 cash on him.
He said officers used "non-lethal projectiles to subdue the men", which had put the holes in the windscreen.
"We've been following these people throughout the day and the earliest opportunity and safest location we decided to arrest them," he said.
Plain-clothes police officers could be seen gathering evidence at the scene.
"The arrest is related to an ongoing investigation by the State Crime Command Organised Crime Squad," NSW Police said in a statement.
A witness has said he saw two men wearing high-vis vests sitting on the ground handcuffed in Centennial Park.
Centennial Park, in the inner-east, borders several affluent suburbs, including Paddington, Woollahra and Randwick.
