By weaponizing the definition of “unsafe or unsound practice in conducting business”

Longstanding regulatory definitions have been weaponized against gun owners to ban firearms, firearm accessories, and ammunition. It is no stretch of the imagination that a rule change could amend the definition of “unsafe or unsound practices” at 12 C.F.R. § 390.419 to also include the sale of firearms, firearm accessories, ammunition, and other dangerous weapons to the general public.

By finding “a violation of an applicable… regulation”

Federal gun laws give the Department of Justice wide authority to regulate the actions of and require recordkeeping by gun companies. Many such violations are mundane and simple mistakes—such as misspelling an abbreviation on a form—for which a gun store could now be penalized. Good-faith, clerical, and ultimately harmless errors in FFL recordkeeping are a statistical inevitability. For example, ATF’s published data concerning its compliance inspections in 2020 reflects that it conducted 5,823 inspections and found and reported errors in 43.7% of them.[i] ATF’s compliance inspections for 2022 increased over 2020 by 1,156 inspections to 6,979 inspections, and ATF’s data reflects that it found and reported errors in 45.5% of the inspected FFLs.[ii] In summary, a failure to clarify whether this section applies only to banking regulations could encourage anti-gun bureaucrats to recommend nearly half of all gun stores lose access to financial services!

By finding “a violation of an applicable law”

If an anti-gun bureaucrat “has reasonable cause to believe that” a member of the firearm industry or their customer “has engaged, is engaged, or is about to” violate federal gun laws, then the anti-gun bureaucrats can recommend de-banking. For example, it is a crime for a gun store to transfer a firearm to a prohibited person, yet criminals purchase firearms all the time, whether by lying on a background check form or the broken background check system failing. By arguing that there is “reasonable cause to believe” that criminals will commit gun crimes after acquiring firearms at gun stores in the future, an anti-gun bureaucrat could easily recommend de-banking gun stores under the SAFER Banking Act.

By finding “a violation of an applicable… rule”

Rule changes have been weaponized to ban firearms (like pistol braced weapons), firearm accessories (like bump stocks), and ammunition (President Obama’s failed green tip ammunition ban) in recent years. These rule changes often falsely assert that (1) the agency had always affirmed what is truly a new position and (2) prior nonbinding guidance given to the industry was incorrect. Therefore, the manufacturer of a product could be de-banked for violating a rule that was just changed even though they had followed ATF guidance at the time.

By finding “a violation of an applicable… written agency guidance”

Even though it is not required by federal law, the firearm industry routinely submits products to ATF in order to receive non-binding determination letters. These determination letters have been reversed in order to destroy entire sectors of the firearm industry—such as bump stock, solvent trap, weapons parts kit, and pistol brace manufacturers. Further, Gun Owners of America has documented instances on which ATF has issued contradictory classification letters on the same day. Under the SAFER Banking Act, a gun store could be de-banked for ignoring incorrect ATF classification letters and guidance.

By classifying standard industry practices as a “matter requiring attention”

According to the SAFER Banking Act, “any activity, conduct, or condition” becomes a valid reason for an anti-gun bureaucrat to recommend de-banking a gun store if could possibly become “a matter requiring attention” including “a supervisory recommendation.” Surely creative anti-gun bureaucrats will abuse such a vague loophole to attack the firearm industry.

By classifying customers as “a threat to national security”

Agencies responsible for national security now routinely refer to gun owners as “Militia Violent Extremists” or “Domestic Violent Extremists.” It is no stretch of the imagination that bureaucrats might recommend de-banking the entire firearm industry based solely on this abhorrent determination that firearm industry customers “pose a threat to national security.” Recent history suggests this is clearly the Democrats and the anti-gun lobby’s goal, such as when:

• Members of the House Oversight and Government Reform Committee accused gun manufacturer Daniel Defense of marketing its products to the “white supremacist” movement based solely on a misunderstanding of an ancient pagan tattoo.
• Manufacturer Palmetto State Armory was accused of marketing its products to the “FBI-identified, far-right, domestic terrorist threat ‘Boogaloo Boys’” based on a floral camo pattern painted onto one of its rifles.
• Several cities—in coordination with the anti-gun lobby—have sued gun parts manufacturers like Polymer80 and JSD Supply for facilitating gang and gun violence by selling its products despite their compliance with state and federal law.

As anti-American bureaucrats have begun labeling patriotic imagery as symbols of violent extremism, this arbitrary set of rules could now punish gun manufacturers for using the Betsy Ross, Gadsden Flag, and more when marketing firearms to customers.

By classifying customers as “a transnational criminal organization [or] drug trafficking organization”

During Operation Fast and Furious the federal government allowed a “transnational criminal organization, drug trafficking organization, or money laundering organization”—namely agents of Mexican cartels—to purchase firearms at gun stores. In response, Congress passed language preventing federal agents from letting cartels obtain firearms “unless law enforcement personnel of the United States continuously monitor or control the firearm at all times.” Therefore, ATF could “monitor” silently as a Mexican Drug Cartel purchased firearms from an unsuspecting gun store only for banking bureaucrats to use that purchase to recommend de-banking that gun store for its unknowing and unwilling participance.

By classifying firearm industry customers as “engaged in… criminal activity”

Criminals routinely straw purchase firearms and lie to gun dealers in violation of federal law. Some surveys estimate that perhaps as many as 30,000 straw purchases are attempted at gun stores each year.[iii] Further, 10.1% of prisoners report obtaining their firearms from “a retail source.”[iv] Under the SAFER Banking Act, bureaucrats would be encouraged to recommend de-banking gun stores for the actions of these criminals.

[i] https://www.atf.gov/firearms/firearms-compliance-inspection-results

[ii] https://www.atf.gov/resource-center/fact-sheet/fact-sheet-facts-and-figures-fiscal-year-2022

[iii] https://giffords.org/lawcenter/gun-laws/policy-areas/crime-guns/trafficking-straw-purchasing/

[iv] https://bjs.ojp.gov/content/pub/pdf/suficspi16.pdf