Regulatory & FFL Compliance Glossary
Essential Terms for Firearms Businesses
The firearms industry operates under unique and stringent federal regulations. Understanding this specialized language is critical for FFL dealers to remain compliant and avoid costly fines or license revocation.
Elite 2A Pay understands this environment. We specialize in providing payment solutions that integrate seamlessly with compliance requirements, ensuring you never face a shutdown due to regulatory misunderstandings.
Table of Contents
Glossary Terms
FFL (Federal Firearms License)
A mandatory license issued by the ATF that permits an individual or company to legally engage in the business of manufacturing, importing, or dealing in firearms. Learn how Elite 2A Pay supports all FFL types.
SOT (Special Occupational Taxpayer)
An annual federal tax paid by FFL holders who are authorized to deal in, manufacture, or import NFA items (Title II firearms). This status is often required in addition to the base FFL. We specialize in SOT-holder payment processing.
NFA (National Firearms Act)
Landmark federal legislation that regulates the manufacture, import, sale, and possession of certain items, including machine guns, suppressors, short-barreled rifles (SBRs), and destructive devices.
Title II Firearms
A collective term for firearms regulated under the NFA. These items require a federal tax stamp and specific transfer documentation (like an ATF Form 4) to be transferred to a non-licensee.
High-Risk Merchant
A business classification used by banks and card networks for industries, like the firearms sector, that have a higher statistical potential for legal exposure, regulatory changes, or elevated chargeback rates. We offer stable, non-high-risk processing.
Bound Book (A&D Record)
The official, mandatory record-keeping log that tracks all firearms acquired (Acquisition) and disposed (Disposition) of by an FFL dealer. This must be maintained accurately and completely for ATF inspection. See our POS systems for integrated A&D record-keeping.
NICS Check
The National Instant Criminal Background Check System check. This check must be conducted by the FFL with the FBI or a state point of contact before the final transfer of a non-NFA firearm to an unlicensed person.
Form 4473
The ATF Firearm Transaction Record form that must be completed and signed by the prospective firearm purchaser. The FFL uses the information on this form to initiate the NICS background check. Our POS integrates with digital 4473 solutions.
FFL Transfer
The process required when a firearm is sold online or across state lines. The selling FFL ships the serialized item to a receiving FFL near the customer's location for the mandatory NICS check and final delivery. Seamless processing for online FFL transfers.
FFL Type 01
The most common FFL license type, authorizing the holder to act as a Dealer in Firearms and a Gunsmith. This is the typical license for retail gun shops and online sellers.
FFL Type 07
An FFL license type authorizing the holder to be a Manufacturer of Firearms and ammunition. A Type 07 FFL who pays the SOT Class 2 tax can also manufacture NFA items.
ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives)
The federal law enforcement agency responsible for administering and enforcing the provisions of the NFA and GCA, and for issuing and inspecting Federal Firearms Licenses.
GCA (Gun Control Act of 1968)
The primary federal law regulating the firearms industry. It established the FFL system, prohibited certain classes of individuals from possessing firearms, and set regulations for sales and transport.
Prohibited Person
An individual who is legally barred from purchasing or possessing a firearm under federal or state law (e.g., convicted felons, those convicted of domestic violence misdemeanors, or fugitives).
Gun Show Loophole
A widely used, non-legal term referring to sales of firearms between unlicensed individuals at events, which are not subject to the same NICS background check requirements as FFL sales.
Curio & Relic (C&R)
A classification for specific firearms that are certified by the ATF to be primarily of historical or collectible significance. They can be transferred under specific, less restrictive rules to an FFL Type 03 Collector.
Straw Purchase
An illegal firearm purchase where the person completing the Form 4473 and undergoing the NICS check is buying the firearm on behalf of another person who is the actual, often prohibited, user.
Compliance Audit/Inspection
A review conducted by an ATF Industry Operations Investigator (IOI) at an FFL's business premises to verify the accuracy of the Bound Book, proper storage, and adherence to all regulations. Get consulting to prepare for your compliance audit.
Brady Law
The common name for the federal legislation that mandated the establishment of the National Instant Criminal Background Check System (NICS) for firearm sales by FFLs.
E-Form 4473
The electronic version of the required firearm transaction record. Using electronic forms can significantly streamline the background check process and reduce transcription errors. Explore POS systems with e4473 integration.
FFL API Integration
A programming interface that allows an e-commerce website to communicate directly with FFL databases to instantly verify a transfer dealer's license status and address during the checkout process. Our gateway supports FFL API validation.
SOT Class 3
A common but often confusing jargon term referring to an FFL dealer who has paid the Special Occupational Tax and is authorized to deal in NFA items (Title II). Need Class 3 support? Contact us today.
FinCEN
The Financial Crimes Enforcement Network, a bureau of the U.S. Treasury that mandates certain reporting requirements and monitors financial transactions for money laundering and other illicit activities, including those in high-risk sectors. Mitigate financial risk with our solutions.
FFL-Friendly Bank
A financial institution that has specifically adopted policies and procedures to underwrite and service merchant accounts for FFL and 2A businesses without automatically classifying them as excessively risky. Our banking partners are 2A-friendly.
Restricted Shipping
Specific carrier regulations and federal/state laws that dictate the method and destination for shipping firearms, ammunition, and accessories, often requiring age verification and special handling. Ensure compliance at checkout for shipping.
Export Control
Federal regulations, such as the Arms Export Control Act (AECA) or ITAR, that govern the sale and export of firearms, components, and related technology out of the United States.
Gunsmithing
The business of repairing, modifying, or customizing firearms. This service typically falls under the FFL Type 01 license and must be documented in the Bound Book.
Form 3 Transfer
An ATF form used for a tax-exempt transfer of an NFA item between two different Special Occupational Taxpayers (SOTs)—for example, from a manufacturer to a dealer.
Multiple Handgun Sale
A federal requirement for an FFL to report the sale or other transfer of two or more handguns to the same purchaser during any five consecutive business days (filed using ATF Form 3310.4). Our POS reports automatically flag multi-gun sales.
Safe Storage Certification
A federal requirement that FFLs certify, via the Form 4473, that they have secure gun storage or safety devices available to the purchaser at the point of transfer. Integrate compliance into your point-of-sale workflow.
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