If you haven’t had an inspection in a few or several years, or maybe you are one of those who has NEVER had the ATF show up for an inspection, guess what? You are most likely next. ATF inspections are a way of life for FFLs of all sizes and types. Whether an 01 dealer, 02 pawn shop, manufacturer, or importer, at some point in time, you will be audited by ATF. It is not a matter of “if” but “when”.
In years past, it was reasonable to believe that “when” ATF found something during an inspection, you would get a chance to correct any issues, change policies, show progress, etc., and all would be just fine. You’ve likely heard that is no longer the case. In the current environment under the Biden Administration, you should be paying special attention to your ATF Inspection Readiness and have a compliance plan in place that defines what YOU expect from your team.
In this article, we go into detail explaining what you should expect when ATF shows up. Remember, you must increase awareness and focus on common compliance mistakes in your business, both with your team and in your operations to have maximum readiness. Everything you and your team do, every SOP (Standard Operating Procedure) you have implemented needs to be focused on ensuring your FFL is following all pertinent federal, state and local laws, regulations, and ordinances. Including those of every U.S. state. Unless you plan, of course, to never sell firearms to out-of-state residents. But that can cost you a lot of revenue, and since it is legal to sell long guns (generally) to out-of-state residents, why leave money on the table?
Where to Start for ATF Readiness
First, you start by not waiting until there is a problem to create a compliance program, consider hiring a compliance professional, and start taking your business’s compliance seriously. It should NOT take receiving a warning letter or warning conference from ATF to get your attention, particularly when ATF appears to be upgrading warnings to revocations in recent months. For years, I have heard FFLs tell me they will just wait for ATF to tell them they need to improve before they invest in doing so. This is simply no longer a reliable option. As a business owner whose livelihood relies on your ability to sell firearms in lawful commerce, you need to ensure the one piece of paper that allows you to do so, your FFL, is protected at all costs.
By reviewing our article about on what to expect when ATF shows up, and this article about the 5 “Deadly Sins” that are triggering ATF to revoke FFLs at an alarming rate, you will have optimal ATF inspection readiness. Now all you will need to do is implement a plan that focuses on each point in both articles on how to be prepared and ready for your first, or next, ATF inspection.
We suggest consideration of the following at a high level and implementing company Policies & Procedures or SOPs to address, in detail, how your team should operate to achieve daily compliance in your store. This is not meant to be a fully inclusive list, and we encourage you to speak to other industry professionals, such as Orchid Advisors, as you develop the plan that best suits your business’s needs.
ATF Inspection Readiness Checklist
Regular Self Audits
- At a minimum, consider doing quarterly inventory audits — Monthly audits are better.
- Have a process in place for when a firearm arrives at your store to verify all regulatory information such as Manufacturer, Importer (if any), Model, Caliber/Gauge, and Serial Number that are on the firearm, and make sure it matches the information on the box.
- Consider adopting a program that incorporates a visual inspection to ensure the firearm in the box you are looking at (or scanning – which is very efficient) has been verified, and the box hasn’t been tampered with.
- Implement a safety inspection – is the chamber clear, magazine empty, etc. No, this isn’t compliance related, but it is a beneficial process nonetheless, and you already have the gun in hand anyway, right?
Organized A&D Book
- When doing your periodic audits, ensure that your A&D Book is book to gun and gun to book.
- If you only account for all the firearms that are “open” in your bound book, if somehow for some unknown reason, a firearm shows up and did not get acquired, you will never catch it. And vice versa, if you are only looking at your guns vs. an inventory report and not your A&D Book, also known as Bound Book, you will never catch a firearm that is not in your records.
- First, if you are using handwritten paper 4473s, you are putting your license at an unnecessary high level of compliance risk. Humans make mistakes, and customers and employees seem to make careers out of it. Electronic 4473s eliminate up to 98% of these minor, human, unintentional, clerical errors. Now is the time to make the move from paper to electronic 4473s.
- Regardless of which e4473 provider you choose – you should still perform mock ATF inspections on your paperwork. 98% is good, but in today’s regulatory environment 100% is required. Assign your best team members, managers, etc., to review 4473s on a weekly or monthly basis. Any errors that are discovered can be corrected in accordance with the instructions on the 4473 and then used as a training opportunity for your staff. Never pass up a chance to educate your team on how to be more compliant.
- Especially If you have multiple locations – consider digitally storing your 4473s. It allows you to conduct internal audits remotely, and you can scan and upload legacy records from anywhere to ensure you are completing those ATF Traces in a timely manner. Even if you have a single location, you should consider the benefits of digital storage:
- Faster Trace Requests.
- Faster ATF Inspections.
- Infinitely more secure than paper.
- More control over who can access sensitive customer data.
- Much less expensive than paper.
- Learn more by requesting a demo of 4473 Cloud here.
- Consider the additional documents you keep with your 4473s. Is each one required? If it is, keep it and audit those documents just like you do your 4473s. If it isn’t, then keeping it probably isn’t doing you any good and may be needlessly exposing your FFL to greater risk. Consider getting rid of all non-required documents you may have with your 4473s today.
Compliance is Critical
These are just a few ideas to get your started. There are many other ways to avoid costly mistakes and close the gaps in your compliance policy. Our friends at FFL Consultants, Orchid Advisors, and FFL Guard can each provide you with additional information and ideas on how to improve or implement your own ATF Audit Readiness Plan!
Whether you operate as a side gig with dreams of being the next Dick and Jim Cabela or are already on your way to achieving your business goals, there is no time like the present to get started on protecting your investment, employees, and your slice of the American dream. Don’t wait until it hurts to respond. Be proactive starting today, using the guidance above to lay the foundation of your compliance program. Remember, compliance is an evolving segment of your FFL’s business, and you will need to be flexible and make changes as the market and environment changes. Start now, or review what you already have in place, but whatever you do, don’t wait for ATF to force your hand.
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