"31 CFR 103.11(uu) includes in the definition of a money services business, any person doing business (emphasis added) in the following capacities1:
• “A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions);” or
1 The definition of a money services business at §103.11(uu)(1)-(5) includes currency dealers or exchangers; check cashers; issuers, sellers, or redeemers of traveler’s checks, money orders, or stored value; or money transmitters. Due to the representations made in your letter, this administrative ruling evaluates only the two capacities with potential relevance to [the business] (currency dealer or exchanger, and money transmitter)."
I do not believe he is a MSB. He is not giving that one person more than $1000 in cash in one day. They are making payments on their merchandise and receiving money back... (this does depend on the $$$ of the check and the $$$ of the payment made.) That being said, I would really monitor the account and close the account if he is conducting MSB transactions. Losing a substantial account is better than having to pay a substantial fine or penalty.