I have been arguing with someone here regarding exempting MSBs. Can we exempt an MSB? Do we need to review their gross revenues from MSB activity to determine their eligibility or is this just for gaming relating activity?

Yes you can exempt an MSB. By nature, MSB's are higher risk accounts, but that doesn't mean you can't exempt them. If you exempt them, it doesn't mean you don't review the activity of the customer either.

I don't understand your last question.

Financial institutions are ineligible for exemption. You can exempt an MSB if more than 50% of its gross revenues are from exemptible activities. Be sure to document nature of business(es) very carefully and verify during your periodic reviews. If you are pushing the 50% mark, make it easy on yourself and don't exempt them. It's not worth the headache.

From FFIEC BSA Manual: "A business that engages in multiple business activities may qualify for an exemption as a non-listed business as long as no more than 50 percent of its gross revenues per year are derived from one or more of the ineligible business activities listed in the rule."