The one thought in every licensee’s mind is not if, but when, will ATF be knocking on the door for a compliance inspection. This possibility is ingrained into their minds from the offset, during their initial FFL application inspection. Among the numerous regulations that are reviewed are the provision of 27 CFR 478.23 – Right of entry and examination. Though an applicant (who later becomes a licensee) will acknowledge that they understand its implications, more than one licensee will scratch their head when an Industry operation investigator (IOI) is at their door waiting at the start of the business day.
ATF’s right of entry and examination per 27 CFR 478.23 has been summarized as follows, although we recommend that you consult the full regulation.
- ATF may enter a licensee’s business premises including places of storage during their business hours.
- The purpose of the inspection is to examine the records and documents that are required of the licensee.
- The inspection may (or rarely may not) cover an inventory of the firearms held by the licensee.
- Generally, a licensee may not be inspected more than once in a 12 month period.
- ATF is not authorized to seize any records or documents other than those which are material evidence in violation of law.
Though these requirements seem straight forward, there are some nuances for licensees to consider.
Many ATF inspections are unannounced, i.e., that is there is no advanced notification. There are exceptions to this norm and is usually driven by the circumstances of the inspection. For example, licensees located in remote locations or those of significant size may require thoughtful consideration. That being said, 27 CFR 478.23 does not require that the inspection to be announced.
When a licensee files it application, it lists the business hours in which it operates. Business hours may also be listed on a storefront or web site. As such, it would benefit a licensee to keep this information updated so it s clear to ATF when entry would be most likely to occur.
IOIs may, at times, request to take records off business premises for review. If a licensee allows this, they should receive a documented receipt showing the records that were taken.
Finally, a licensee may not be inspected more than once in a 12-month period. However, that 12-month period can begin when the prior inspection began, not when the inspection finished. At times, licensees may allow an IOI to visit their premises for another inspection within a 12-month period based upon the provisions of the compliance plan submitted in response to the violations cited during the previous inspection.
Whether or not you aware of an upcoming inspection, the obligation to comply with relevant laws, regulations and rulings remain the same. That obligation is independent of the inspection process.
To that end, we recommend that licensees should be aware of their compliance status and conduct internal reviews or hire a qualified 3rd party to do it on their behalf. Assessing your position early and regularly is a meaningful way to reduce your violation risk.
For additional information on ATF inspection processes, remediating violations in the wake of an inspection or for more information on 3rd party assessments, contact Orchid Advisors or NSSF.