Enhanced regulation of high risk dealers

Chapter 44 of title 18, United States Code, is amended by adding at the end the following: 935. Regulation of high risk dealers (a) In general On a determination by the Attorney General that a licensed dealer is a high risk dealer, the Attorney General shall— (1) require the dealer to permanently alter the business practices of the dealer or make physical improvements to the firearms business premises of the dealer to reduce the diversion of firearms from the firearms inventory of the dealer, which requirements shall include requiring the dealer to— (A) adopt electronic acquisition and disposition record keeping; (B) provide the National Tracing Center with electronic access to all records required to be kept under this chapter that are possessed by the dealer; (C) make video and audio recordings of all firearms transactions, and maintain the recordings for 360 days; and (D) retain for more than 360 days, any video or audio recording of a firearm transaction that was the subject of a trace request; and (2) not less frequently than biennially, inspect or examine the inventory, records, and business premises of the dealer without reasonable cause or warrant. (b) Cessation On application of a high risk dealer, on a form prescribed by the Attorney General, and approval of the application by the Attorney General in writing, the inspections of the dealer under subsection (a)(2) shall cease— (1) on certification by the Attorney General that the dealer— (A) has permanently altered the business practices of the dealer or made the physical improvements required under subsection (a)(1); and (B) will maintain the practices and improvements until otherwise notified by the Attorney General; and (2) if, on 2 separate and consecutive occasions at least 6 months apart, the Attorney General has inspected and examined the books and records of the dealer and, during that period, the dealer has not been notified of any violations of Federal, State, or local law. (c) Notice The Attorney General shall inform high risk dealers in writing of their obligations under this section. (d) Definition The term high risk dealer means any dealer identified by the Attorney General as lacking sufficient policies, procedures, or controls to prevent the diversion from lawful commerce of firearms or ammunition in the firearms business inventory of the dealer or transferred by the dealer, and firearms possessed by the dealer that are to be destroyed, and, thus, necessitating enhanced regulation and enforcement including regular inspection and examination of the inventory, records, and premises of the firearms business of the dealer. The Attorney General shall so identify such a dealer if— (1) the Attorney General has issued to the dealer a report of violation or warning letter; (2) the dealer has been the subject of a warning conference with the Attorney General within the preceding 36 months; or (3) in the preceding 12 months, the dealer was the source of 2 or more firearms that were used in a crime under Federal, State, or local law within 36 months after the last known retail sale of the firearm..