I assume you are talking about a long gun. Your brother did indeed need to do a transfer through a FFL to be legal. If it was a handgun, the FFL messed up. From the ATF FAQ website (http://www.atf.gov/firearms/faq/unlicensed-persons.html):
Q: From whom may an unlicensed person acquire a firearm under the GCA?
A person may only acquire a firearm within the person’s own State, except that he or she may purchase or otherwise acquire a rifle or shotgun, in person, at a licensee’s premises in any State, provided the sale complies with State laws applicable in the State of sale and the State where the purchaser resides. A person may borrow or rent a firearm in any State for temporary use for lawful sporting purposes.
[18 U.S.C. 922(a)(3) and (5), 922((3), 27 CFR 478.29 and 478.30]