Terrorist Firearms Detection Act of 1988

Terrorist Firearms Detection Act of 1988 - Amends the Federal criminal code to prohibit the manufacture, importation, sale, transfer, or possession of undetectable firearms (firearms which are not susceptible to detection by magnetometers commonly used at airports).

Provides an affirmative defense where the defendant proves that the firearm is of a type which the Secretary of the Treasury has determined to be susceptible to detection by magnetometer.

States that this Act does not apply to: (1) conduct by or under the authority of the United States; or (2) certain prototype or model firearms.

Requires the Secretary to submit annual reports to the Congress regarding the state of firearm and firearm detection technology.