Phase I Exemptions for CTRs are allowed for a publicly traded company listed on a major exchange.

Since First Data Corp is listed on the NYSE and its subsidiaries include Western Union AND since our customer is an agent of Western Union AND if we document that, could we grant a Phase I Exemption OR is there an exception to the exemption for a MSB? Our customer never cashes checks, she only transfers money as an Agent. According to FAQs for MSBs from FinCen, "a business that is an MSB solely because it serves as an agent of another MSB" does not have to register as an MSB.

Bottom line: Can we grant a Phase I Exemption to our customer?

I would take a look at the list of customers ineligible for Phase II exemptions http://www.fincen.gov/f9022-53-1.pdf (see page 2, ineligible customers). It seems that using a Phase I exemption might be an end run of the issue.

If your customer were a 51% subsidiary of a listed company, you could exempt it under Phase I rules, regardless of whether it participates in any of the activities in mobdiaz's list of ineligible customers. That would not be an end run; it would be perfectly acceptable (although you would still need to treat them as a higher-risk customer).

But your agent is not owned in any way by Western Union or by First Data. So your question is moot. The answer is a simple "No."