If a Money Service Business (MSB) takes a $1,200 check, returns $800 in cash to their customer and sends a $400 money transmittal (wire transfer) or sells $400 in money orders has the MSB now exceeded the $1,000 cash threshold and qualifies for registration with FinCEN as an MSB?

IMHO...I would say yes. They did more than $1000 in one day for one person

My original thought as well was that they exceeded $1,000 and qualified for registration. I keep thinking however, that several years ago FinCEN had a Q&A (which I can't find) regarding this circumstance and stated as long as the actual cash being returned to a customer didn't exceed the $1,000 threshold registration would not be required. Similarly, if a supermarket were to take a $1,200 payroll check for a purchase of $300 in groceries and return $900 in cash would registration be required? Does anyone recall a Q&A clarifying such a scenario?

In the scenario where part of the proceeds were used to purchase groceries, I would say that the customer does not qualify as an MSB. In the others, however, they would. According to 31 CFR 103.11(uu)(2), a check casher is "a person who does... cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one of more transactions." And there is no minimum dollar threshold for money transmitters.

I think this is the guidance you remember.

If my customer's deposit contains checks in excess of $1000. then they register. How would you ever be able to determine at what point the bearer of the check is not receiving > $1000? How do you document the amount of purchase versus the cash received? My customer typically will say that they do not charge a fee, checks are cashed as a convenience for their customers. That is well and good but they need to register. Monitoring is enough of a nightmare! That's just my thoughts on it!!

Thanks for your feedback on my posting and the guidance link provided by Irish Rover. This was the guidance that I had previously recalled.