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Legally Armed: V20N5

By Teresa G. Ficaretta, Esq. & Johanna Reeves, Esq.

Compliance Programs for Federal Firearms Licensees: An Important Step in Protecting Your Business

Despite what some in the media and urban policy centers would have you believe, the firearms industry is heavily regulated. On any given day, operations of a firearms business are subject to the oversight of several distinct federal agencies, each with their own set of rules, regulations and policies. First is the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the agency charged with administering and enforcing the Gun Control Act of 1968 (GCA), the National Firearms Act (NFA), and the permanent import provisions of the Arms Export Control Act (AECA). If the company engages in the business of exporting or importing, the company is also subject to the rules and regulations of the U.S. Department of State, the U.S. Department of Commerce, the U.S. Treasury Office of Foreign Assets Control, and U.S. Customs and Border Protection. Government contractors must also comply with the Federal Acquisition Regulations and the Department of Defense supplement known as the Defense Acquisition Regulations System, and public companies must adhere to the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act.

Each of these regulatory regimes are complex, and regardless of the best intentions of management, employees, and corporate boards, mistakes will happen. When a regulatory violation occurs, the government’s response will depend on the intent of the persons involved. Was it a case of simple human error, a misunderstanding of the regulations? Or does the violation rise to the level of willfulness, reckless disregard or an intentional attempt to subvert the law?

The government considers the mindset of the people involved in the violation as a crucial factor in determining whether the company or individuals should be subject to enforcement, such as fines, penalties, license revocation or suspension, exclusion from future government business, debarment from importing or exporting, or criminal penalties. Furthermore, federal enforcement action against a firearms business will often receive primetime, front page media coverage.

Federal investigators, regulators and prosecutors will likely have a skeptical approach, compounded by the fact that they will...


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