Zero Tolerance Protection: ATF Inspections & How to Prepare

Written by Orchid

|

September 21, 2022

|

0 comments
White text atop black background next to grayscale photo of President Joe Biden

As the firearm industry’s regulatory agency, the ATF is responsible for ensuring firearms businesses maintain compliance with federal, state, and local laws and regulations, educating licensees on the specific requirements of those laws and regulations, and preventing illegal firearms trafficking and other criminal activities involving firearms. To do so, ATF employs over 800 industry operations investigators (IOIs) to conduct compliance inspections of FFLs in each of the agency’s 25 field divisions across the nation.

In 2022, ATF IOIs have completed nearly 5,000 compliance inspections of FFLs – or an average of 600 per month. However, with pressure from the Biden administration to raise ATF funding, the agency is expected to hire additional personnel for the purpose of increasing inspections and enforcement actions against “rogue” FFLs.

Based on reported data from this year, that call has already been answered, with monthly inspections having increased 63% since January. Below, we’ll detail the basics of how ATF compliance inspections are conducted, the post-inspection process, and various corrective actions taken.

How Inspections Are Conducted

Compliance inspections are conducted by IOIs in ATF field divisions, which can encompass multiple states, a single state, or part of a state, and be home to anywhere from a few hundred FFLs to thousands.

Prohibited by law from inspecting a firearms business more than once every 12 months (except in limited circumstances), most FFLs are inspected by ATF every 3-5 years. But it should be noted that licensees with larger operations or in states deemed high risk for firearms trafficking may be inspected more frequently.

While ATF typically does not give advance notice prior to conducting a compliance inspection, inspections may only occur on a licensee’s business premises (including off-site storage locations) and during licensee business hours. Depending on the size of the licensee, inspections may last one or multiple days.

During an inspection, IOIs will examine your records, firearm inventory, and conduct of business, performing various activities, including:

  • Reviewing business operations (e.g., ownership and responsible person (RP) information)
  • Evaluating internal controls and security measures
  • Verifying compliance with federal, state and local laws
  • Conducting complete physical inventory of firearms
  • Reviewing acquisition and disposition (A&D) bound book records
  • Reviewing all ATF forms and documents (e.g., Forms 4473, 3310.4, etc.)

If violations are found during an inspection, the nature and extent of the violations will determine next steps and possible corrective action.

Post-Inspection Process

Following an inspection, IOIs will sit down with licensees to review any violations found. If no violations are reported – congratulations, your FFL has done a great job maintaining compliance! However, if one or more violations are found, you will receive a Report of Violations (ROV).

Exactly what it sounds like, the ROV notes any violations of law or regulation and outlines the discrepancy and requirements for corrective action. Investigators will then review firearm laws and regulations with you and suggest voluntary actions or steps that can be made to improve compliance. You may also ask questions regarding violations during this time.

FFLs who receive violations may then be subject to a recall inspection at least one year after the initial inspection is completed. This follow-up inspection may be limited in scope to areas cited in the previous inspection or expanded to a full inspection to determine if the licensee has improved its compliance or remains non-compliant with firearms laws and regulations.

ATF Corrective Actions

In addition to issuing a Report of Violations, ATF has several discretionary ways to guide FFLs toward corrective actions for future compliance. These corrective actions, listed in order of severity, are described below:

Report of Violations: Report describing violations cited during inspection, requiring appropriate corrective action and response by the FFL. A recall inspection is discretionary.

Warning Letter: Letter outlining violations found during the inspection, the need to correct the violations, and the potential for revocation if the licensee does not come into compliance. A recall inspection is discretionary.

Warning Conference: Requirement to meet with ATF Director of Industry Operations or Field Division Area Supervisor to discuss violations cited during inspection, corrective actions, and potential for revocation. A recall inspection must be conducted.

Revocation: Active FFL license is revoked. Revocation is generally reserved for FFLs with willful or repeated violations and is the focus of Biden’s zero tolerance campaign.

Proactive Preparation

Though you can never know when ATF may come knocking, there are ways your business can prepare in anticipation of a compliance inspection.

First, implement compliance best practices throughout your operations, including every aspect of firearm acquisition and disposal, serialization, and storage, as well as document completion and recordkeeping. Assign one or more Responsible Person(s), train employees on necessary laws and regulations, establish a multi-step compliance review process, and utilize leading FFL software and technology to increase efficiency and prevent human oversight.

Next, maintain organized firearm inventory and up-to-date records to ensure serialized products, ATF documents, and your A&D bound book are compliant and ready for examination. And lastly, conduct regular self-inspections or seek professional mock inspection services to test your compliance practices and catch possible violations before you get cited.

Orchid Zero Tolerance Protection

At Orchid, our team of operations, technology and legal professionals understand the risks of today’s firearm businesses. For over a decade, we’ve worked with FFLs big and small to implement leading compliance best practices and software solutions to eliminate violations and protect licenses from revocation.

Continuing our Zero Tolerance Protection series, we’ll share our expertise and experience in proactive compliance as we look closer at Biden’s policy and its impact on the firearms industry, review how to avoid and correct violations, and suggest ways to protect your FFL from the risk of revocation. Next, we’ll the last of the five explicitly cited willful violations in refusing ATF inspection.

In the meantime, learn more about a Zero Tolerance Rapid Assessment of prior ATF Reports of Violations, your A&D Bound Book, and recent ATF Forms 4473. We also encourage you to watch our webinar on ATF zero tolerance enforcement, schedule an in-person or remote mock ATF inspection, and implement leading compliance software in your retail FFL. Contact Orchid today to protect your FFL from a zero tolerance revocation.

Free Zero Tolerance Webinar

0 Comments

Don’t Get Booted from Your Anti-Firearm Processor

Reliably accept credit card payments wherever you sell firearms.

Why Manage Multiple Vendors When You Can Have One?

The industry’s most robust cloud-based software for single and multi-store retail and range FFLs.