The FinCEN FAQs state that an employer cashing only its own payroll checks would not be considered a check casher (and therefore would not be considered to be a money services business) for purposes of FinCEN’s MSB requirements, even if the amounts of checks cashed would exceed $1,000.

FinCEN recently codified this exclusion. A July 21, 2011 amendment specifically excludes “[a] person that redeems its own checks” from the definition of “check casher.” 31 CFR 1010.100(ff)(2)(ii)(D)76 Fed. Reg. 48535 (July 21, 2011).

As to documenting the fact that the business does not check any third-party checks, that is up to your bank. FinCEN does not have any specific guidance or requirements as to documenting that a customer is exempt from the MSB registration requirements.