By Orchid Advisors – #1 in FFL Compliance Solutions.
Each year, the ATF releases its fiscal year inspection results. The findings are the result of Industry Operations Investigators’ field work. This advisory answers five key questions related to the inspection process as follows:
WHAT IS AN ATF COMPLIANCE INSPECTION (OTHERWISE KNOWN AS AN FFL COMPLIANCE INSPECTION)?
In February of 2013, the ATF’s Public Affairs Division issued a fact sheet titled “FFL Compliance Inspections.” That fact sheet read, in summary:
The ATF’s 2014 FFL Inspection Results can be found in more detail by here.
2. WHAT HAPPENS DURING AN ATF DEALER INSPECTION OR ATF MANUFACTURER INSPECTION?
“During inspections, ATF Industry Operations Investigators’ (IOIs) review records, inventory, and the licensee’s conduct of business. To assist in meeting and maintaining compliance, investigators also provide instructional and educational materials about the requirements of the law and regulations and best business practices.”
One of the major steps in the inspection is what is called a Book to Physical or “Bi-Directional Serial Number Inventory.” During this audit step, the ATF performs a tracing of serialized assets found at your facility to the Book of Acquisition and Disposition (or Bound Book). Likewise, the test is performed in the reverse direction – Serial Numbers found in the Bound Book are traced back to the physical asset. Both steps are performed to ensure that the records properly match the serialized firearms under the control of the company. To learn more about conducting a leading Bi-Directional Serial Number Inventory in advance of an ATF Inspection, read the following whitepaper called Serialized Inventory Analysis for the Firearms Industry – Ten Steps That Will Make a Difference Today.
3. WHAT ARE THE TOP ATF COMPLIANCE INSPECTION VIOLATIONS?
“Compliance failures, which constitute violations of law and regulation, commonly disclosed during the inspection process include:
We recently published a more exhaustive list of the Top 10 ATF Violations for Firearm Dealers and the Top 10 ATF Violations for Firearm Manufacturers. They are conveniently located in the ATF’s 2014 FFL Inspection Results and the Appendix of the 2014 Firearms Compliance Guide.
4. WHAT HAPPENS AFTER AN ATF INSPECTION?
“When violations of the law and regulations are disclosed during an inspection, a Report of Violations is issued to the licensee that outlines the discrepancy and the requirements for corrective action. ATF also works to gain cooperation and compliance from FFLs by issuing warning letters and holding warning conferences. Despite these remedial actions, on rare occasions ATF encounters a licensee who fails to comply with the law and regulations and demonstrates a lack of commitment to improving his or her business practices. In such cases where willfulness is demonstrated, ATF’s obligation to protect public safety may require revocation of the federal firearms license.
ATF investigators assist licensees in developing corrective actions when violations are identified and encourage licensees to constructively engage in the remediation process. In this way, ATF attempts to bring licensees into compliance before it becomes necessary to take administrative action against the licensee. When an ATF inspection results in a warning conference or potential revocation, the licensee is provided an opportunity to develop a written plan that details the steps taken to correct the problems identified and measures implemented to ensure future compliance.”
5. HOW DO I PASS AN ATF DEALER INSPECTION OR ATF MANUFACTURING INSPECTION?
There is no full-proof, secret answer to ensuring that you will pass your Dealer Inspection or Manufacturing Inspection with zero violations. But there are many things you can do to decrease the likelihood of receiving a violation. The most obvious answers are: (1) know the regulations; and (2) comply with them.
The following are a few recommended steps for minimizing your FFL inspection risk.
If you wish to learn more about ATF Regulations, ATF Inspection Readiness or scheduling an Orchid Advisors Mock ATF Inspection, contact us today.