BMO Compliance & Ethical Standards 2 — Questions and Answers
Question 1: A BMO client asks you to process a wire transfer that seems unusually large and lacks a clear business purpose. What is the most appropriate first step?
- Process it immediately to avoid upsetting the client
- File a Suspicious Transaction Report (STR) with FINTRAC without any further review
- Conduct enhanced due diligence and escalate to your compliance team (Correct answer)
- Decline the transaction without explanation
Correct answer: Conduct enhanced due diligence and escalate to your compliance team
Enhanced due diligence and escalation to compliance is the proper first step before deciding whether to file an STR or refuse the transaction.
Question 2: Under BMO's Code of Conduct, which of the following situations most clearly represents a conflict of interest?
- An employee recommends a BMO product that genuinely suits the client's needs
- An employee directs business to a vendor in which they hold a personal financial stake (Correct answer)
- An employee uses BMO's employee discount on banking services
- An employee attends a industry conference paid for by BMO
Correct answer: An employee directs business to a vendor in which they hold a personal financial stake
Directing business to a vendor where the employee has a personal financial interest is a textbook conflict of interest requiring disclosure and recusal.
Question 3: Which regulation primarily governs anti-money laundering (AML) obligations for Canadian banks like BMO?
- The Bank Act
- The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) (Correct answer)
- The Investment Industry Regulatory Organization of Canada (IIROC) rules
- The Financial Consumer Agency of Canada Act
Correct answer: The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
The PCMLTFA is Canada's primary AML/ATF legislation that imposes reporting, record-keeping, and compliance program requirements on banks.
Question 4: An employee overhears a conversation suggesting a colleague is sharing confidential client data with a competitor. What should the employee do?
- Confront the colleague directly and demand they stop
- Report the concern through BMO's ethics hotline or to a compliance officer (Correct answer)
- Ignore it, as it may be a misunderstanding and not their business
- Inform the client whose data may have been shared immediately
Correct answer: Report the concern through BMO's ethics hotline or to a compliance officer
BMO's speak-up culture requires employees to report potential misconduct through designated channels such as the ethics hotline or compliance.
Question 5: Which of the following best describes 'tipping off' in the context of AML compliance?
- Providing a financial tip to a client about an upcoming product promotion
- Informing a subject that they are under AML investigation or that a report has been filed (Correct answer)
- Sharing client financial data with regulators upon request
- Alerting management to a potential compliance breach within the bank
Correct answer: Informing a subject that they are under AML investigation or that a report has been filed
Tipping off is the illegal act of disclosing to a suspect that they are being investigated or that a suspicious transaction report has been filed.
Question 6: A BMO employee receives an expensive gift from a client after closing a deal. According to ethical standards, what should the employee do?
- Accept the gift as a token of goodwill since the deal is already closed
- Accept it but report and seek approval per BMO's gift policy (Correct answer)
- Return the gift and explain BMO's gift policy to the client
- Accept the gift only if it is below the personal threshold for reporting
Correct answer: Accept it but report and seek approval per BMO's gift policy
BMO's gift and entertainment policy requires employees to report gifts and obtain approval, rather than unilaterally accepting or refusing them.
Question 7: What is the purpose of a Know Your Customer (KYC) process at BMO?
- To market additional products to existing clients based on their profile
- To verify client identity and assess the risk of their transactions for AML purposes (Correct answer)
- To ensure clients understand all BMO fee structures before opening accounts
- To collect client data for sharing with affiliated BMO subsidiaries
Correct answer: To verify client identity and assess the risk of their transactions for AML purposes
KYC processes verify client identity and assess transaction risk to prevent money laundering, terrorist financing, and fraud.
BMO Compliance & Ethical Standards 2
A BMO client asks you to process a wire transfer that seems unusually large and lacks a clear business purpose.
What is the most appropriate first step?