On granting a new exemption: What documentation should we use to determine that our grocery store customer who also cashes checks meets the less than 50% rule for listed businesses? The reg reads "gross revenues;" do I need a statement from the customer or does the review of account activity suffice? (They meet all other requirements.)

I put a BSA Exemption Review form out on BOL tools. It is under BSA Exemption Analysis. You might find it useful in working through the exemption process with a Phase II customer.

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On granting a new exemption: What documentation should we use to determine that our grocery store customer who also cashes checks meets the less than 50% rule for listed businesses? The reg reads "gross revenues;" do I need a statement from the customer or does the review of account activity suffice? (They meet all other requirements.)

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To help make your decision, read this first.
FinCEN 2002-1

While it is possible, it is unlikely that a grocery store would get more than 50% of its revenue from check cashing fees. You can ask the store for some documentation, but I think you are safe with the exemption.

IMHO you should never exempt a customer who also does check cashing activity. The regulators/examiners are very concerned with this industry, and I think they would not want to see them exempted. I have several markets with check cashing income in excess of the market income. As they realised the income from check cashing they have reduced their market stock. One that I know of has no beer or cigarettes any longer, just a few basic supplies. They say it is less hassle and less dangerous and they don't have to stay open all hours of the night to make their money. Once their regular check cashing customers come by, they close the market by six or seven in the evening.
Hope this helps you.

I think it depends on what sort of grocery you are talking about. In our market most of the large supermarkets do at least some check cashing as a customer service, just like they also accept utility payments. They don't make a lot of their money from this, but it gets customers in. I don't think you would want to un-exempt all of these, because your ctr volume would go way up for no good reason. I think it comes back to knowing who you are doing business with. Just my two cents, it may or may not be worth what you paid for it.

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I think it depends on what sort of grocery you are talking about. In our market most of the large supermarkets do at least some check cashing as a customer service, just like they also accept utility payments.

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You are absolutely correct. There are some "markets" that are fronts for check cashers and money transmitters, but major supermarket chains and larger independent markets are not likely to fit into this category. FinCEN's goal is to cut the number of useless CTRs. IMO filing CTRs on major supermarkets and large grocery checks just because they cash checks in the normal course of business is not necessary, and that is why FinCEN finally published the guidance on the definition of "gross revenue".

During your review of the account, you can probably very quickly determine from deposit and withdrawal patterns whether you are dealing with a business acting primarily as a grocer or as a check casher. As with all of our higher risk customers, this type business should be reviewed periodically whether exempt or not. We exempt a number of grocery stores and convenience stores that offer check cashing. We do account reviews at least annually that include statement of customer as to gross revenues, obtain evidence of MSB and state registration and constantly remind our employees of their duty to report any suspicious activity on a customer or account (even exempt customers). We have not had any regulatory exemption issues to date.

And don't forget, it's not just grocers that cash checks for a fee--bars, service stations and even furniture stores may offer that service. Mom and pop businesses often look for income however they can get it--and they are seldom aware of any of the rules they should be following in the process.

I have a grocery store that is a registered MSB, he sells money orders so is he "Serving as financial institutions or agents of financial institutions of any type" under the exemption rules? Or is just check cashing activity considered serving as a financial institution? On his MSB registration he indicates he cashes checks, but does not deposit any third party checks with us.

He would have to pass the 50% revenue rule if he is a registered MSB.