One of three things is likely going on with your friends upper:
One, it has a look alike brake on it. There are several very well made post ban legal muzzle brakes available that look very much like the A2 flash suppressor. They do nothing al all to reduce flash, but look nice.
Two, Rock River and Knights sells barrels with comletely non-functional press on flash hiders. These press ons go over the 16" barrels. Because they go over the barrel, the slots are not exposed and they do not work as suppressors. They are A2 suppressors, look great, but do not work. If you are sure it is a Colt gun with a Colt barrel, this is unlikely in your friends situation.
Three, he has a real A2 flash suppressor on his gun. If he is elligable and has a govt/LEO only marked postban gun, no problem and he is fine. Govt/LEO only marked guns overrides the pre/post ban rules. If he is not eilligible to have the LEO gun, and has a regular commercial brand post ban gun with the real deal A2 flash suppressor pictured above, it is a federal offence.