BMO Professional Standards & Ethics 2 — Questions and Answers
Question 1: A BMO relationship manager discovers their close friend is about to make a large investment based on a rumor about a client's upcoming merger. What is the correct action?
- Warn the friend privately without disclosing details
- Report the potential insider trading concern to compliance immediately (Correct answer)
- Ignore it since the friend is not a BMO employee
- Advise the friend to consult a financial advisor
Correct answer: Report the potential insider trading concern to compliance immediately
Any potential insider trading situation must be reported to the compliance department immediately, regardless of whether the individual involved is a BMO employee.
Question 2: Under BMO's conflict of interest policy, when must an employee disclose a personal financial interest in a transaction?
- Only if the interest exceeds $10,000
- Only when directly asked by a manager
- Whenever the interest could influence or appear to influence their professional judgment (Correct answer)
- Only for publicly traded securities
Correct answer: Whenever the interest could influence or appear to influence their professional judgment
Employees must disclose personal financial interests whenever those interests could — or could reasonably appear to — influence their professional judgment.
Question 3: A BMO employee receives an expensive gift from a vendor during contract renewal negotiations. What should the employee do?
- Accept it as a token of goodwill and report it later
- Decline the gift and report the offer to their manager or compliance (Correct answer)
- Accept it if its value is under the company gift policy threshold
- Return it only if the vendor's contract is awarded to a competitor
Correct answer: Decline the gift and report the offer to their manager or compliance
Gifts received during active negotiations create a clear conflict of interest and must be declined and reported, regardless of value.
Question 4: Which of the following best describes BMO's approach to anti-money laundering (AML) obligations for front-line staff?
- AML responsibilities belong exclusively to the compliance team
- Front-line staff must report suspicious transactions and complete required AML training (Correct answer)
- Employees only need to flag transactions over $1 million
- AML applies only to international wire transfers
Correct answer: Front-line staff must report suspicious transactions and complete required AML training
Front-line employees share responsibility for AML compliance, including identifying and reporting suspicious activity and completing mandatory training.
Question 5: An employee overhears a colleague sharing confidential client account details at a coffee shop. The correct response is to:
- Remind the colleague privately after they finish the call
- Report the breach of client confidentiality to a manager or compliance (Correct answer)
- Assume the colleague has the client's permission to discuss details publicly
- Do nothing, as it is not your direct responsibility
Correct answer: Report the breach of client confidentiality to a manager or compliance
Breaches of client confidentiality must be reported to management or compliance, as all employees have a duty to protect client information.
Question 6: A BMO financial advisor recommends a high-fee product to a client primarily because it earns the advisor a larger commission. This behavior violates which core principle?
- The principle of operational efficiency
- The duty to act in the client's best interest (suitability and fair dealing) (Correct answer)
- The principle of competitive market pricing
- The principle of revenue maximization
Correct answer: The duty to act in the client's best interest (suitability and fair dealing)
Recommending products based on commission rather than client suitability violates the duty to act in the client's best interest and fair dealing standards.
Question 7: BMO's Code of Conduct requires employees to complete ethics training:
- Only upon initial hiring
- Annually or as required by policy updates (Correct answer)
- Every five years
- Only if assigned by a direct manager
Correct answer: Annually or as required by policy updates
BMO requires employees to complete ethics and compliance training on an annual basis and whenever significant policy updates occur.
BMO Professional Standards & Ethics 2
A BMO relationship manager discovers their close friend is about to make a large investment based on a rumor about a client's upcoming merger.
What is the correct action?