BMO Professional Standards & Ethics 3 — Questions and Answers
Question 1: A BMO employee is asked by their manager to backdate a document to make a loan application appear compliant. The employee should:
- Comply since it is a manager's direct instruction
- Refuse and report the request to compliance or ethics hotline (Correct answer)
- Comply but keep a personal record of what occurred
- Request written authorization before proceeding
Correct answer: Refuse and report the request to compliance or ethics hotline
Backdating documents is fraudulent and illegal; employees must refuse and escalate such requests through proper channels including the ethics hotline.
Question 2: Under BMO's whistleblower protections, an employee who reports suspected misconduct in good faith:
- May still face disciplinary action at management discretion
- Is protected from retaliation by BMO policy and applicable law (Correct answer)
- Must first gather documented evidence before reporting
- Is only protected if the report is made anonymously
Correct answer: Is protected from retaliation by BMO policy and applicable law
BMO policy and applicable laws protect employees who report suspected misconduct in good faith from any form of retaliation.
Question 3: Which of the following represents an appropriate use of BMO's confidential client data?
- Sharing client portfolio data with a spouse who is also a financial professional
- Using client data solely to service the client's account per their consent (Correct answer)
- Accessing client accounts to check financial trends for personal investment decisions
- Providing client details to a trusted external vendor without a data-sharing agreement
Correct answer: Using client data solely to service the client's account per their consent
Client data must be used only to service the client's account and only in ways the client has consented to.
Question 4: A BMO employee discovers an accounting error that inflates the bank's quarterly earnings report. The ethical obligation is to:
- Correct the error quietly without involving management to avoid embarrassment
- Report the error to the appropriate internal parties immediately (Correct answer)
- Wait until the end of the fiscal year to assess its materiality
- Ignore it if the error is under 5% of total earnings
Correct answer: Report the error to the appropriate internal parties immediately
Financial reporting errors must be disclosed immediately to the appropriate internal parties to ensure accurate and transparent reporting.
Question 5: When a BMO employee faces an ethical dilemma not explicitly covered in the Code of Conduct, the best approach is to:
- Make a judgment call based on what is most profitable for the bank
- Ask: would I be comfortable if this action appeared on the front page of a newspaper? (Correct answer)
- Proceed with the action and document rationale afterward
- Defer all decisions to senior management to avoid personal liability
Correct answer: Ask: would I be comfortable if this action appeared on the front page of a newspaper?
A practical ethics test is to consider whether the action would withstand public scrutiny — this 'newspaper test' helps guide decisions in gray areas.
Question 6: BMO's policy on political contributions by employees primarily aims to:
- Encourage employee civic engagement on behalf of the bank
- Prevent the bank from being unduly associated with political candidates or parties (Correct answer)
- Maximize the bank's influence in government policy-making
- Limit employee donations to a maximum dollar amount
Correct answer: Prevent the bank from being unduly associated with political candidates or parties
BMO restricts political contributions to ensure the bank is not perceived as endorsing political candidates or parties, protecting its impartiality.
Question 7: An employee notices a colleague consistently circumventing transaction approval limits by splitting large transactions into smaller ones. This practice is known as:
- Layering
- Structuring (also called 'smurfing') (Correct answer)
- Commingling
- Front-running
Correct answer: Structuring (also called 'smurfing')
Structuring, or smurfing, is the deliberate splitting of transactions to evade reporting thresholds and is illegal under AML regulations.
BMO Professional Standards & Ethics 3
A BMO employee is asked by their manager to backdate a document to make a loan application appear compliant.
The employee should: