This might be an obvious one. I have a customer (grocery store) who does wires through Western Union. Does this automatically make him a MSB? If not, why would he not be considered a MSB?

The store is a MSB, but as an agent of Western Union,if this is the only MSB activity the store engages in, they don't need to register with FinCEN.

Does the grocery store offer check cashing services (most do)? If so, they're an MSB.

The store sales MO but only for under the threshold. The main concern is the wire through Western Union. I told the owner to contact FinCEN directly for an Administrative ruling. One of my other customers did this and received a letter back (it did take a little while though). So I am hoping they tell my customer NO. For mine and the customers sake.

Whose MOs do they sell? If WU (through Integrated Payment System) they are doing so under agent agreement and, as BSAdiva indicated, they are certainly an MSB but do not need to register with FinCEN. As long as you have a copy of their WU agreement, or can verify their agent status in another way, such as on the WU Web site, you should not need any other administrative ruling, etc. However, this does not mean that you do not have to monitor the activity in the account, show the custome ras an MSB in your files, etc.