Pawn shops are subject to the same recordkeeping requirements of your local bank. Before the transaction begins, your customer must provide proper identification. He must own the item he is pawning or selling and in the case of a firearm, provide proof that he is the legal owner. You must faithfully document and keep a record of each transaction. This paper trail helps prevent you from knowingly dealing in stolen goods and assists the police with identifying potential fencing suspects.

Federal Recordkeeping Laws

Two federal agencies in particular are interested in your customer’s identity. The National Security Agency, through the US Patriot Act, is always on the lookout for potential terrorists. The Alcohol, Tobacco and Firearms agency wants to know who buys, sells and pawns firearms. You must run a check of your customer through the National Instant Check System per the Brady Act. You can meet federal recordkeeping requirement by make a photocopy of your customer’s identification and gun license, keeping a copy of the NICS report and by taking a thumbprint.

Arizona Recordkeeping Laws

Whenever a customer buys, sells or pawns an item in Arizona, you must provide a pawn ticket as a record of the transaction. The pawn ticket must list the name, address and telephone number of your business and of the customer. You must include the type of identification presented, the ID number, the customer’s birthdate, hair color, eye color, height and weight. You must list and describe each item on the pawn ticket. For pawned items, the pawn ticket must list the loan amount, the interest rate and the maturity date.

Reports to Law Enforcement

You must provide a report of each transaction to your county sheriff within two days. You can use the form provided by the sheriff’s department or download the information to a national database such as LeadsOnline. The report must include the same information you collected on the pawn ticket. In particular, law enforcement will look for a detailed description of each item pawned or sold, including the make, model number, serial number and unusual identifying features. By using this information, law enforcement can track down lost or stolen goods.

Recordkeeping Violation Penalties

You must keep your copy of the pawn ticket for at least two years after the transaction date. If you or your employees dispose of pawn tickets before the two years are up or fail to issue pawn tickets, you are guilty of a Class 1 misdemeanor. The maximum penalty for a Class 1 misdemeanor is 3 years probation, 6 months of jail time, a $2,500 fine for each person involved and a $20,000 business fine. Your county sheriff can revoke your pawnbroker’s license for 30 days for your first violation and may revoke or not renew your license if you have two violations within a 12-month period.