ATF Compliance Diligence – Before My Next Inspection

How to Prepare for and Pass an FFL ATF Inspection

(Updated December 2017)

Imagine the debate we’re going to spark if we say that imitating biathletes is the way to achieve a gold star culture of compliance.  You might shoot skeet or trap, or spend hours in sleet and snow in a tree stand, or know how to hunker into the blind, but biathletes strive for endurance until they cross the finish line and then fall over (literally).  They cross-train between shooting, skiing, and running.  And, they do it year-round.

What does that have to do with compliance?  Attitude.

It’s what came to mind the other day, speaking with a former FFL.  He was impressive in his working knowledge of FFL compliance.  He spoke fluently in A&D.  He trained his employees.  He knew his customers and assessed the validity of transactions.  His gripe?  He had never been audited by the ATF, and, knowing that they could perform one audit per year without a warrant or advance notice, he had been looking forward to getting his gold medal in compliance.

This is the winning attitude of the cross-trainer with endurance and the expectation of the ATF Industry Operations Investigators.

There are numerous ways you can “train” for your ATF inspection; and just like an athlete, you may chose to do something every day in preparation.  It is a process of continuous improvement through reviewing, reconciling, and educating.  Here are just a few suggestions of daily routines that can bring you closer to the “Compliance Gold”:

  • Review your ATF required records for completeness and accuracy.
  • Organize your inventory and records for inspection ease.
  • Conduct “mini” audits and serial number inventories to keep your numbers true.
  • Learn of the latest in compliance “best practices” by asking Orchid Advisors experts.
  • Train your employees using Orchid Advisors online Firearms Compliance University; education is key.

Think that it’s only FFLs that have compliance requirements?  Think again.  Compliance is a term for businesses in all sectors of the economy, all around the world.  There is compliance with the Americans with Disabilities Act, compliance with HIPAA, compliance with the DEC and EPA, compliance with the SEC, and more.  Just about any company doing business should anticipate and acknowledge its compliance responsibilities.

It is through businesses in other sectors that we can learn how to improve our own approach.  In the healthcare setting, many of the compliance determinations are published and available on line.  Let’s take a recent example of an OCR settlement with a hospital, which suffered a data breach of protected health information and was ordered to pay a multi-million dollar fine.  A significant part of the federal government findings centered around the compliance activities (or lack thereof) prior to the breach, specifically, the failure to conduct a risk analysis.

We can also look to the SEC, where three investment advisory firms were charged for repeatedly ignoring problems with their compliance programs.  The SEC has a specific compliance program to target firms with prior compliance deficiencies that fail to act upon those warnings.  The SEC press release included “Had the problems been addressed, the firms could have prevented their eventual securities law violations.”

And it’s worth pulling an example from OSHA, where the failure to establish a lockout/tagout program resulted in a fatality.

Are you starting to see how the compliance requirements in other industries can be readily analogized to our field?  Risk analysis.  Remediation.  Benefit of compliance programs and procedures.  All of these elements are the cornerstones of creating a culture of compliance that will put you into the same mind set as the FFL we earlier described.  This preparation is crucial and transcends all Federal Firearm License types and sizes.


Fact Sheet – Federal Firearms Compliance Inspections and Revocation Process

 

Fast Facts (Courtesy ATF, 2016)

  1. ATF is responsible for licensing persons engaged in manufacturing, importing, and dealing in firearms and ensuring that those who are licensed to engage in those businesses do so in compliance with applicable laws and regulations.
  2. There were more than 139,000 FFLs in fiscal year 2015. This includes firearm licenses for dealers, manufacturers, importers, and collectors. During that time, ATF conducted 8,696 firearms compliance inspections.
  3. It is critical that federal firearms licensees comply with the Gun Control Act of 1968, and its implementing regulations, in order to assist law enforcement efforts, prevent the diversion of firearms from lawful commerce to the illegal market, ensure successful tracing of firearms, and to protect the public.

 

It’s true that this Advisory is lighter than most.  For those of you already rigorous in your compliance activities, it’s a soft way of saying that even though you may not see the ATF everyday, keep doing what you’re doing.  If you haven’t ramped up your compliance game, it’s a nice way of saying get on it, now, while it’s summer, and things are a little bit slower.

Why?

Because the final point in our biathlete analogy is this: penalty loops.  Biathlon is that unique sport in which being off just that smidgen can result in penalty loops at what would otherwise be the finish line.  Visible to spectators.  Costing time that could result in losing a podium placement.  It is absolutely not where the biathlete wants to end up.

Whether you’re motivated by the quest for a compliance gold medal or a desire to avoid an ATF Report of Violations, when you think “compliance,” think “biathlete” and start your training today!

2016 ATF FFL Inspection Statistics

9,760 Inspections – 45.8% without ATF FFL Violations
Meaning that Inspection Violations Increased
Most frequently cited violations:
    • Transferee did not properly complete Section A, F 4473 – 27 CFR 124(c)(1)
    • Failure to timely record entries in bound record (Acquisition and Disposition Book) – 27 CFR 478.125e
    • Failure to complete forms as indicated in instructions (this violation is often cited when the licensee failed to properly complete a form, but there is not a separate regulatory citation addressing the omitted or misdocumented item) – 27 CFR 478.21 (a)-(b)
    • Licensee did not record on F 4473 the date on which NICS was contacted – 27 CFR478.124 (c)(3)(iv)
    • Licensee failed to obtain and/or document purchaser’s Identification document – 27 CFR 478.124(c)(3)(i)
    • Licensee did not sign and date F 4473 – 27 CFR 478.124 (c)(5)
    • Licensee failed to report multiple handgun sales – 27 CFR 478.126a
    • Licensee failed to properly identify firearm on F 4473 – 27 CFR 124(c)(4)
    • Licensee failed to contact NICS and wait stipulated time prior to transfer of firearm – 27 CFR 478.102(a)
    • Licensee disposed of firearm to a person he had reasonable cause to believe was prohibited – 27 CFR 478.99(c) 

Have questions? Contact Us today.

 


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