Banking Without Borders Product Training

Last Revised: June 2012

Contents

 Banking Without Borders (BWB) Program Overview   What is it?

How does it compare to competitor’s offerings     Target Market Value Proposition Offering Program Support  Product Training   Accounts Concentrator Deposit Receivables Service    FCCS Online Banking for Business Electronic Funds Transfer     Wholesale Lockbox DirectCheque Tax and Bill Payments File Connectivity  Appendices 1

Program Overview

What is the Banking Without Borders (BWB) Program?

 BMO sells its Canadian Treasury Management product suite to Correspondent Banks headquartered in US, Canada, Europe or Asia  The Correspondent Bank then “resells” these cash management products to their client base to enable these clients to bank in Canada, while maintaining one single banking relationship with them, their primary provider  The Correspondent Bank controls the account and remains the primary contact with their client  BMO has been working with correspondent banking partners for over 20 years and currently have over a 12 partners on the BWB Program  Our program is flexible - we work with our partners to tailor our offer to their needs  Demonstrated success at driving value for correspondent banks and their clients 3

Competitor’s Offerings

 Of the 6 major financial institutions in Canada only a few offer a similar program to BMO’s Banking without Borders  Their offerings are typically a more standard offering that does not allow them the flexibility of the Banking without Borders Program  BMO has a dedicated group that has been trained to deal specifically with Financial Institutions on the program. This enables them to have the experience to troubleshoot issues effectively and make recommendations  BMO offers a training program to the sales groups of our partners so that they can develop their understanding of the program and the benefit to their clients 4

Target Market

The BWB Program will meet the needs of a Bank who has clients that:

 Have branches, offices or sales activities in Canada  Have business dealings in Canada but manage treasury functions from their head-office  Regularly deposit Canadian dollar instruments to their account with you  Want to collect funds, make payments and receive information from Canada – quickly and easily  Prefer a trusted source with whom they already have a local banking relationship  Do not want the complexity of managing new, multi-national banking relationships 5

Value Proposition – Differentiation Based on Relationship and Convenience

For You – Deeper Relationships



More Capabilities:

Protected and enhanced relationships with your clients 

More Resources:

Minimal investment and effort 

More Solutions:

Provide leading edge cross border cash management and treasury solutions to your clients  New sources of

Revenue For Your Clients – Convenience



Convenience:

Maintain their banking relationship with you – their trusted banker  Seamless access to robust Canadian cash management and treasury solutions  Improved cash management 

Value:

Reduced cost and complexity 

Service:

Reduced complexity associated with other international banking relationships 66

Overview of Different Models

Mutual Corporate Client (MCC) Client Of Correspondent Banking (CCB) Account Structure Documentation Forms Implementation Forms

    Bank to bank agreement Client signs with BMO directly INSERT BANK NAME client signs the “Mutual Corporate client (MCC) Authorization” INSERT BANK NAME client signs the appropriate BMO service agreement  Account are jointly owned/controlled by INSERT BANK NAME and your client   INSERT BANK NAME and your client both sign the “Agreement for CCB Accounts” INSERT BANK NAME to provide BMO with requisite account open material   INSERT BANK NAME Bank completes the appropriate BMO Implementation forms gathering input from the client  Forms submitted either using paper, either via email or mail  INSERT BANK NAME Bank completes the appropriate BMO Implementation forms gathering input from the client Forms submitted either using paper, either via email or mail

Credit Risk Controls Information Reporting

    INSERT BANK NAME clients can operate on a pre-funded or via credit lines carved from the INSERT BANK NAME credit lines at BMO   INSERT BANK NAME clients have access to real time information online Online Banking for Business is slated for a private label and single sign on capability in upcoming releases BMO can deliver MT940 or BAI file with previous day data to INSERT BANK NAME   INSERT BANK NAME clients always operate with credit support from INSERT BANK NAME lines at BMO. Prefunding is not supported INSERT BANK NAME has access to real time activity on their clients on BMO’s Correspondent Banking portal CDA Web BMO can deliver MT940 or BAI file with previous day data to INSERT BANK NAME BMO supports several models within our Banking Without Borders program 77

Team Approach with Dedicated Resources

Relationship & Sales Management Program Management POD Team



Team Model:

Manage our relationship and the success of your program 

Partnership:

Work closely with you to meet your needs 

Program:

Strategic focus on today and future 

Expertise:

Dedicated POD with Banking Without Borders program training

Sales Manager:

Marcia Cowan

Senior Sales Associate

: Rebecca Patton

Program Manager:

Sarah Cairns

Senior Product Manager:

Jay Pickett

Your Dedicated Team Client Service:

Munira Gohill, Brian Liu

Help Desk:

Adam Hewitt, Maria Kadomtseva, Yousouf Mohoboob

Implementation:

Khatra Haji, Frank Morelli

Documentation:

Stephanie Chan 88

Program Support - Web Site

 Pitch Book Template  White labelled marketing materials  Fact sheets  Legal forms  Learning tools  Process Flows 9

Our End-to-End Program Management Approach

Strategic Alignment

  A flexible program tailored to suit the needs of you and your clients A collaborative relationship to deliver on your strategy and promise to your client’s

Program and Products

 We work with you, our banking partner, to determine the ideal solution to offer your client  Our delivery model is customized based on your client delivery strategy  The entire BMO Treasury Management product suite is available to you

Sales Support and Training

 Tailored training for your team  Dedicated sales support for complex deals and RFPs

Implementation

 Dedicated implementation support  Dedicated documentation and account opening support  All your customer implementations are handled by people who understand your strategy and are aligned to our partnership

After Sales Support

 Dedicated Customer Service and Help Desk support  Dedicated 1-800 number and e-mail for our partner banks 10

Product Training

BWB: Full suite of world class treasury management solutions

  BMO offers the

full suite

of treasury management services to our Correspondent Bank partners There are

no

restrictions on what Canadian services we can offer

Receivables Solutions:

Lockbox Incoming Wire Payments 12

Standard Product Suite

 Account (CAD & USD)  Check writing capabilities Information Solutions:  Online Banking for Business Platform  White Label Capabilities  File Connectivity  MT940/BAI solutions Payables Solutions:  Directcheque + Enhanced Positive Pay  Electronic Funds Transfer  Tax and Bill Payments Receivables Solutions:  Wholesale Lockbox (WLBX) Note: Although this is our standard offering, all products and services are available to your clients

Other Product Offerings

 FirstBank Automated Clearing Services (FACS)  Wire Payments  FirstBank Cash Concentrator Service (FCCS)  Credit Cards – Referral, not through the program As our offering includes all products and services available our team is readily available to assist with RFP’s that you may receive from your clients. We can offer assistance with responding to questions or can also participate in calls with the prospective client as needed. 14

Current Accounts

Current Account Characteristics

 Available on BMO’s International platform (CBDS Accounts) or Domestic platform (Mech accounts)  Provides access to Canadian banking services  Both available in Canadian and US Dollars (domestic)  Credit and Terms and Conditions  On default, no overdraft limits will be made available on the checking accounts, i.e. operations take place on a “pre-funded” basis  Accounts will be interest bearing, however interest paying arrangements should be typically offered to customers on a defensive basis 16

Account Features

Feature Credit Interest on balances Statements Statement Cut-Off times Explanation BMO pays interest on demand deposit accounts. It is up to you whether or not you want to promote this feature.

Interest paid is a negotiated rate and is typically only paid up to a certain level of balances. Your customers will receive a detailed statement of account activity from BMO through you Will contain images (front and back of checks) Delivery via MT940 or Paper Special cut-off times can only be for fixed dates (e.g., 15th of the month, weekly -- Friday only).

17

Account Features

Feature Pre-dated, post-dated and stale checks Insurance on deposit balances Explanation Pre-dated, post-dated and stale dated checks typically go unnoticed (but if a customer identifies a check, they have recourse. That is, they can return a check up to the date indicated on the check.

This feature is offered by the Canadian Deposit Insurance Corporation (CDIC) and the cost is not passed on to the customer. Further details are available on the CDIC website at www.cdic.ca

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Block Account Agreements

Similarities:

 Standard Agreements will be discussed and agreed upon by BMO and yourselves   Changes to the standard forms are not allowed Blocked Account Agreement between all respective parties is duly executed

Agreements Without Trigger

 Lender retains complete authority and control over the operation of the Blocked Account  Borrower is not allowed to debit account  End of Business day all balances will be transferred to the Collection Account

Agreements With Trigger

 Blocked Account operates within the normal parameters established within the Agreement.

 Borrower maintains authority on Blocked Account  Written notice in the form of Trigger Notice from Lender is supplied to Bank of Montreal  Upon receipt of Trigger Notice, Bank of Montreal will require up to two (2) business days – as per Section 4. of Blocked Account Agreement- to implement the necessary changes required by the Trigger Notice. Accordingly Bank of Montreal will act upon the received notice and instruct their processing center to block all debit transactions relating to the Blocked account  Processing center will block all debit transactions and allow credit transactions to the Blocked Account  Bank of Montreal will transfer account balance to Collection Account.

 Client waives all authority to Debit Blocked Account  Borrower loses authority on the operational management of the Blocked Account and Lender acquires operational authority and control 19

Concentrator Deposit Receivables Services (CDRS)

Concentrator Deposit Receivable Services (CDRS): Features

 Deposits to the account available through SWIFT MT 940 statements or via the Client Direct Access (CDA) site  Information can flow from field locations through the use of 16 character alpha-numeric customer ID and 35 character alpha-numeric customer description field.  Specialized deposit forms (CR 72) allow for the deposit at any BMO branch location in Canada 21

Concentrator Deposit Receivable Services (CDRS): Benefits

Improved cash flow  Provide immediate access to funds  Enable businesses to minimize excess balances and streamline reconciliation Detailed, online information reporting  Provides transaction details online via CDA  Allow businesses to monitor each of their outlet’s daily deposits Increased security and control  Allow businesses to monitor each of their outlet’s deposit activity 22

FirstBank® Cash Concentrator Services (FCCS)

FCCS: Features

 Daily reports identify the office making the deposit, division number, branch transit numbers, value date, amounts deposited and a message field  Data File available in both 80 and 1464 bit files  Reports are available via our Online Banking for Business platform or through hard copy with at the branch of account  Information can flow from field locations through the use of 25 character alpha-numeric message field  A special concentrator number is assigned for making deposits and generating reports 24

FCCS: Benefits

Improved cash flow  Provide immediate access to funds  Enable businesses to minimize excess balances and streamline reconciliation Detailed, online information reporting  Provide real-time transaction details online via our Online Banking for Business platform  Allow businesses to monitor each of their outlet’s daily deposits Increased security and control  Allow customers to monitor each outlet’s deposit activity  Prevent outlets from having access to sensitive account information 25

FCCS: Complimentary Service

 Drawcheque Service  A deposit management and transfer service  Canadian dollar deposits made at any Canadian FI can be transferred to the customers BMO consolidation account and receive same day value  Can be used as a complimentary service to FCCS or as a payment collection service  Online  IVR 26

Online Banking for Business

Online Banking for Business: Product Overview

 Online Banking for Business is a web-based cash management solution  Real-time account information (mech accounts only)     Single source for all treasury management products and reports Flexible administration tools Ability to designate multiple users and approvers Receive Alerts  Make timely and informed business decisions  Save time with easy, anywhere access  Gain added security and control  Only need a PC and an Internet connection  A modular platform: your customers can choose the services they need today and add modules as their business needs change OLBB supports full single sign on and private label functionality enhancing the end client experience 28

Online Banking for Business: Benefits

Increased control  Timely information allows customers to make informed business decisions  Customers can control their own administration by setting up and deleting users in seconds, as well as resetting user passwords Convenience  Allows customers to access their account information and perform transactions around the clock - from their own PC  Customers can receive all of their cash management reports electronically through the file transfer facility Flexibility  Tailor services to match their specific needs  Choose only the modules they need today and add modules as their business grows Security  Online Banking for Business uses 256-bit encryption, the strongest form of encryption generally available in Web browsers today  Requires 2 levels of user IDs and passwords  Ability to limit user access by account, report template, transaction type and dollar amount 29

Online Banking for Business: Features

STANDARD MODULES  Image Search  Customer Self Administration OPTIONAL MODULES  Electronic fund transfers (EFT)  File Transfer Facility (FTF)  DirectCheque Inquiries & Stop Payments  Wholesale Lockbox  Lockbox Imaging  Tax and Bill Payments  Wire Payments 30

Electronic Funds Transfer (EFT/ACH)

EFT – Product Overview

 EFT is an electronic funds transfer service that provides our customers the ability to electronically process transactions in CAD or USD through any Canadian financial institution.

 EFT is of benefit to any customers that need to be able to process debit or credit transactions electronically for collections or disbursements could be interested in EFT. The higher the transaction volume your customer has, the more cost effective EFT’s are (versus issuing checks). It is for customers who need to:  Pay employees  Pay suppliers, utilities, etc.     Receive payments from customers via pre-authorized debits (PAD) Improve security by eliminating lost, stolen and forged checks Eliminate reliance on the postal system Eliminate embarrassing late payments and associated charges 32

EFT: Features

 Payment Files – – Customer Released Fixed Frequency  File creation and transmission File Creation File Transmission Post Delivery Functions Reporting

Option 1 Option 2

Payment files – customer release or fixed frequency Online Banking for Business – EFT module Online Banking for Business Online Banking for Business – EFT module – File Transfer Facility (FTF) module or GXS Online Banking for Business – File Transfer Facility (FTF) module 33

EFT: Features

 Post delivery functions – – Corrections Resubmissions – – – – Recall Verify Tracing File Status 34

EFT: Features

Feature Remittance Information Explanation EFT is regulated by CPA (Canadian Payments Association) and supports corporate to corporate, corporate to consumer and consumer to corporate type payments. However EFT does not support remittance data.

Remittance Information EFT is regulated by CPA (Canadian Payments Association) and supports corporate to corporate, corporate to consumer and consumer to corporate type payments. However EFT does not support remittance data.

Settlement Settlement CPA Standards establishes the lead time to post funds based on serviceability codes. 97% of banks are code 1 which means the funds are available to the customer the next business day.

CPA Standards establishes the lead time to post funds based on serviceability codes. 97% of banks are code 1 which means the funds are available to the customer the next business day.

35

EFT: Benefits

 Reduced Costs  Enhanced Customer/Vendor Relations  Improved Cash Management  Reduced risk of check fraud 36

Wholesale Lockbox (WLBX)

Wholesale Lockbox (WLBX)

 BMO has a Wholesale Lockbox solution with national coverage. We have processing centres located in Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver  Enables businesses to receive mail payments at strategically located post office boxes for same day processing and deposit into their BMO Bank of Montreal account  Wholesale Lockbox is one of the most efficient ways to collect, process and consolidate paper based deposits into a single account  Cash flow and cash application process enhanced by increasing the speed of the collection of receivables and the flow of information  Primary targets are larger Commercial and Corporate customers, although smaller companies also find value in the Wholesale Lockbox service  Any customer with the following needs could be interested in Wholesale Lockbox:  They receive

low-volume, high-dollar

paper payments from customers  They wish to

maximize cash flow

information is received and funds availability, and improve the speed with which 38

Wholesale Lockbox (WLBX)

 Wholesale Lockbox allows customer’s customers to mail invoice payments directly to a strategically located lockbox. The lockboxes are cleared daily and credits are made to the customer’s account  Wholesale Lockbox typically handles a low transaction volume, with a relatively high dollar value per transaction  They are usually business-to-business payments and the paper invoices processed could vary in size and format  Wholesale Lockbox is an extremely manual process, that results in a lot of keystrokes 39

Wholesale Lockbox - Features

 The deposit advice package (may include original invoice, check copies, envelopes, and detail deposit listing) is mailed directly to the customer's office  A duplicate deposit advice can be dispatched to an alternative customer addresses  A copy of each check deposited can be provided with the deposit advice and a second copy can be included with the duplicate advice  Specialized sorts and match and staple combinations of the invoice, check images and envelopes can be provided  Imaging available through Online Banking for Business or via CD-ROM and bulk file image delivery  Notification and payment details can be provided via fax report or data transmission. Data entry of invoice information and capture of check MICR line is available. Standard reporting time is at end of day (16:00 ET)  Lockboxes are offered in Canadian or USD currency  Lockboxes offer a post date feature up to 365 days 40

Wholesale Lockbox: Features

Feature Lockbox Processing Times Bulk Imaging Solutions Explanation Wholesale lockbox provides a standard 4 p.m. ET cut off. customers are charged extra for earlier cut-off times given the need to prioritize their work over others. No charge for later cut-off times.

We offer a bulk image delivery solution for wholesale lockbox (checks, invoices, envelopes, etc) Deposit of lockbox proceeds to account Canadian wholesale lockbox service has one deposit per day (8 p.m. ET) for current day ledger credit. Deposits are made via an EFT file.

41

Wholesale Lockbox - Imaging

 WLBX Imaging via Online Banking for Business allows your customers to access images and view lockbox documents including all correspondence (envelopes, invoices, etc.)  Web  Search and view lockbox documents End-of-day Intraday   Specified date View Lockbox deposit activity report Up to 90 day history  CD-ROM  Lockbox images available via CD-ROM and can be provided daily, weekly, monthly after 48 hours of the end of processing  CDs are encrypted to provide enhanced security  Lockbox document images from all lockboxes can be consolidated into one CD or a separate CD can be created for each lockbox  Software used for CD-ROM viewing is loaded onto each and every CD and is automatically launched from the disk when loaded into the CD-ROM drive  Alternatively we are able to deliver lockbox images via bulk file image delivery 42

DirectCheque (DCH)

DirectCheque - Product Overview

 DirectCheque is a low cost, fully automated check processing and reconciliation service designed for high volume check issuers  DirectCheque provides consistent, readily accessible disbursement information, including a computer-generated printout of cancelled checks coinciding with a statement cycle  The service lowers check processing costs, while providing automatic tracing and the flexibility to quickly issue stop payments  This account reconcilement product is ideal for any small, mid-market, commercial and corporate businesses that issue a considerable volume of checks.

 Any customer with the following needs could be interested in DirectCheque (DCH):  Customers who are looking for an economical and flexible check processing and reconciliation solution     Customers who require processing and reporting of paid checks based on their preferred accounting or statement cycle Customers who wish to manage check fraud risk Customers who issue a significant volume of checks (i.e., a minimum 500 checks per account, per reconciliation) Customers who want to save time, money or resources internally reconciling checks cashed with check issued 44

DirectCheque - Basics

Pseudo Accounts A unique number assigned to a DirectCheque customer. Pseudo accounts

cannot

be accessed through Online Banking for Business for account information and transfers. Posting Accounts A BMO internal suspense account used for posting and balancing.

Funding Accounts Account is owned by the customer and is used to fund the check cleared the previous day. A zero balancing transaction is automatically established between the posting account and funding account as required 45

DirectCheque - Basics

 A unique branch number is encoded on the checks.  Funded through the customer’s account  Electronic Reports are available.

 Online check status inquiry and stop payment placement/removal is available via Online Banking for Business.

 Check images for DirectCheque accounts are available online (Online Banking for Business), CD ROMs, DVD-ROMs and Bulk File Image Delivery.

46

DirectCheque - Benefits and Features

Benefits

 Reduced Costs  Increased Control  Faster, More Reliable Data Exchange  Fraud Risk Reduction with Check Validation service which can include option of payee name verification.

Features

 Two basic reconciliation plans  Return of paid checks  Bypass branch processing  Daily status of stop payments  Optional critical value report  Online check status inquiry  Check Validation service with the option of payee name verification 47

DirectCheque - Reconciliation Plans

 DirectCheque (DCH) is specifically designed for high volume check issuers.

 Two basic reconciliation plans are available:  Partial Reconciliation - Paid check list – A hard copy reconciliation report is provided. The report lists paid checks in serial number order, showing serial number, dollar amount and paid date. Paid checks are sorted and returned to the customer in convenient storage boxes.  Full Reconciliation – Includes the features of the plan listed above  The customer supplies BMO with check issue data via electronic transmission for MICR Positive Pay or Payee name verification. customer to send honour/dishonour instructions to Symcor prior to 2:00 pm Eastern Standard Time.

 Options for Positive Pay:  Match to Issue MICR  Payee Name Verification  Critical Value 48

DirectCheque - Reconciliation Plans

Account Plan Sort Plan 1 Plan 2 Plan 5    Returned Account Reconciliation Report Paid check Data Print-out of all issued and paid checks Customer supplied check issue information       Paper FTF Hard copy FTF Plan 2 & 5 Positive Pay Match to Issue    FTF Hard copy FTF 49

DirectCheque - Issue Files - Plan 2 & 5

 Check issue file must be concurrent with each physical issuance. Issue files can be sent with one or many items contained in the file.

 Issue files can be submitted to BMO via the following transmission methods  File Transfer Facility: a web enabled file transfer method. Each user with SEND file capability requires a secure ID device  GXS  Issue files can be received anytime prior to 11:00 p.m. for same day processing.

 Issue file specifications are included in the DirectCheque Manual  Issue Files must be successfully tested prior to production  Issue file confirmation is available; indicates file has been successfully received by BMO  All pay-no-pay decisions need to be received by BMO no later then 2:00p.m EST. 50

DirectCheque - Issue Files Plan 2 & 5 cont’d

*Best Practice Tips*

 Changes to the issue file or file creation method should always be tested; this can be coordinated by contacting the Customer Service or Implementation Teams  Issue files should be sent early in the day to ensure ample time is available to address any production support requirements  More than one user should be assigned with the capability to SEND files to BMO to accommodate for vacations/absences 51

DirectCheque - Output Reports

CRP 92003-13 CRP 92005-32 CRP 92005-35 15021 PNI Report CVT Report Daily Paid Reject Report Recap of Posted Items Diagnostic Summary Report Balance Sheet Pay No Issue Report – Available for MICR Positive Pay customers only Critical Value Transaction Report 52

DirectCheque - Imaging Solutions

 Available through Online Banking for Business, CR-ROM, DVD-ROM or via Bulk File Image Delivery  Your customers can search, view, download and print images of their processed checks any time of the day. Search criteria includes:  Transit/Account Number (mandatory)  Process date range (mandatory)  Check serial number (optional)  Check dollar amount (optional)  Item Sequence Number (optional)  Images can be retrieved in batches for convenience  Images are available the day after they are processed  The online image retention extends back 100 calendar days  Images are presented in JPEG file format 53

DirectCheque: Features

Feature Positive Pay Decisioning Timeline Explanation The decision deadline is 2pm EST, regardless of customer location.

Imaging Solutions Image Archives Customers are able to access images archives via Online Banking for Business up to 100 days history.

Bank of Montreal has a 7 year internal archive. Should an image past 100 calendar days be required this can be obtained by contacting the Client Service Team.

54

Tax and Bill Payments

Tax and Bill Payments: Product Overview

 The Tax and Bill Payments module enables your client to pay and file Federal and Provincial business taxes as well as utility and other corporate bills over the Internet  Any Online Banking for Business user can be enrolled in the Tax and Bill Payments module  In order to submit a payment, the Online Banking for Business user specifies the recipient, the amount, and the date on which a payment is to be made  The payment information is forwarded to any internal approvers that have been set up, and the amount will automatically be debited from the payment account once the payment is fully approved . 56

Tax and Bill Payment: Features

 Allows customers to arrange payment of their taxes and bill payments online when it’s convenient for them, 24 hours a day, 7 days a week  Control their cash flow by future-dating their payments up to one year in advance in most cases and help prevent late payment charges  Tailor payment approvals by specifying:   The number of approvals required to approve a payment User and company transaction limits  Once a payment is approved, the payment is considered complete and will be released on the value date specified by the user who initiated the payment  Allows customers to minimize paperwork by filing and paying electronically; saving them time and money  Simplifies their record keeping with confirmation numbers for each payment that appears on their statement, making reconciliation quick and easy  There is a one-time self-registration for the service, with no enrolment costs 57

File Connectivity

Connecting to the Bank – High Speed Connectivity

 BMO launched new high speed connectivity options to exchange files with our customer. The new options are offered in conjunction with GXS (Global eXchange Services).  Supporting the most widely used communication protocols including AS2, Secure FTP, and VPN; GXS is able to meet and exceed our customers robust needs.

 GXS offers special connectivity that customers currently do not receive via Online Banking for Business FTF (e.g. scripting). New options address the needs of both large corporate customers and small businesses who require automated file exchange.

 These features help our customers to automate file exchange with much needed confidentiality, speed, integrity, and authentication of transferred data  New options address the needs of both large corporate customers and small businesses who require automated file exchange 59

Benefits

 Improved, Dependable, and Secure access anytime anywhere via the internet  Increased Flexibility and Time Saving by automating file and report processing  Improved Integration and Cost Savings for companies of any size by using the latest industry standard business to business technology  Customers may select from various connectivity options offering real time communication  Manual operator may not be required; therefore minimizing the risk of file manipulation (SOX compliance) 60

GXS vs. FTF

Features

High Speed Internet Access Server to Server Transmission Scripted Automated File Exchange Encryption Security Compliance Component e.g. SOX Ability to Transfer Large Files (Over 10 Mega Bytes) Technology Support / Maintenance Image Transfer (Future)

FTF via Online Banking for Business

Available Not Available Available Available

GXS

Not Available Available Available Available 128 Bit Encryption No - Manual Operator required to process files 128 Bit to VPN IPsec Encryption Yes – Encrypted, Automated, and can be Scripted Not designed to transfer large files Supported and updated Not Available Able Supported and updated Available 61

Thank you!

For more information on how this program can benefit you and your customers please contact us anytime

Marcia Cowan – Sales Manager

Global Treasury Management BMO Capital Markets T. 416-867-2796 [email protected]

Sarah Cairns - Program Manager

Global Treasury Management BMO Capital Markets T. 416-643-4342 [email protected]

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Appendices

Canadian vs. U.S. Banking Systems

Banking in Canada

               Consolidated - 6 major financial institutions Cross-country branch network Post-dated checks allowed Same-day value for checks Single mail delivery per day Pre-dating of clearing transactions Credit interest Service charges EFT (CPA 005) EDI Decreasing check volumes Consumer debit transactions exceed credit card transactions Consumer PAD accepted and utilized extensively Wires – large value payments Check Images cannot be used to make deposits

Banking in the U.S.

               Fragmented – thousands of financial institutions No interstate banking No post-dating of checks Processing float Multiple mail deliveries per day Controlled disbursement accounts Sweep accounts Earnings credit ACH EDI Check volumes decreasing since 2004 Check preferred consumer payment method Coupon model Wires – common payment method Remote Image Capture Common

Our unique North American footprint helps you bridge the gap

Check Fraud

 Twenty-five percent (25%) of all fraud committed in Canada is check-related (CBA)  Major types of check fraud:  Forged checks: one of the most common types of check fraud; forged drawer or endorsement   Altered checks: original check (date, amount and/or payee) is changed without knowledge or consent of issuer Counterfeit checks: reproduction of an original, legitimate check

Altered date Altered amount Altered payee Forged drawer

Understanding check fraud techniques

CPA Rules Regarding Check Fraud

Reason Altered item: Time Frame to Return Via Clearing

Original check (amount, payee, and/or date) has been changed without the knowledge or consent of the issuer

Counterfeit:

90 days Next business day A reproduction of an original, legitimate check

Missing Endorsement:

Signature of drawer is missing Up to 6 years in the clearing

Forged drawer:

Signature of drawer (person or company issuing the check) has been forged

Forged endorsement:

Signature/endorsement of payee has been forged Next business day Unlimited (CPA) Bills of Exchange Act requires drawer to notify drawee bank within 12 months

E-Payments as a Target for Fraud

Transmission Initiation / Approval Identity/passwords compromised at initiation/approval points Payment file/account information compromised during transmission Processing Bank systems/services/payment information compromised during processing

CPA Rules Regarding EFT Exceptions

Reason

Unauthorized debit with PAD agreement Unauthorized debit without PAD agreement EFT credit error correction

Time Frame to Return Via Clearing

 Business - 10 calendar days after date on which the PAD was processed to payor’s account  Personal – 90 calendar days after date on which the PAD was processed to payor’s account  90 calendar days after date on which the PAD was processed to payor’s account  No later than 4 business days after delivery of the original credit transaction OR  3 Business days after the date the funds are to be made available of the original transaction (e.g. late transactions) 

*It should be noted that both recourses are contingent on the funds being available to retrieve

Safe and Secure E-Commerce

Initiation/Approval Transmission Processing What BMO does for you:

 Strong encryption   Digital certificates Automatic log out after 10 minutes   of inactivity Complex security architecture Latest security patches

BMO – Your Partner in Fighting Fraud

 Web-based treasury management – Online Banking for Business:  Access management   Session management User management - transaction, account and user thresholds and controls   Secure transactions File confirmation   Payables Plus – payables automation and outsourcing – EFT, EDI, wires, check Positive Pay/Reverse Positive Pay – check fraud prevention tools  Check imaging

Customization

Customized Information Delivery

 BMO’s expert advisory service that reviews your multiple data sources and recommends a quick and easy integration solution with output files or reports tailored to your specifications.

 Performed entirely by BMO’s IT mapping team freeing up your internal resources  Supports informed decision making with targeted management reports   A streamlined process delivers: Reduced costs through automation and ERP integration   Seamlessly integrated data with your existing in-house accounting software and systems Improved capabilities to accelerate data exchange and reduce barriers to partnerships     Ability to monitor transaction data end-to-end Can reduce delays and errors created by multiple application, system fixes and patches Can deliver reports based on preferred format and/or map to an industry standard externally such as XML Convenience and Security - can be combined with our existing BMO line of products i.e. EFT/Wires/DCH/EDI/others and secure high-speed transmission methods i.e.: GXS with PGP encryption option or FTF (File Transfer Facility)

One-stop shop for all your mapping needs

Disclaimer

These materials are confidential and proprietary to, and may not be reproduced, disseminated or referred to, in whole or in part without the prior consent of BMO Capital Markets (“BMO”). These materials have been prepared exclusively for the BMO client or potential client to which such materials are delivered and may not be used for any purpose other than as authorized in writing by BMO. BMO assumes no responsibility for verification of the information in these materials, and no representation or warranty is made as to the accuracy or completeness of such information. BMO assumes no obligation to correct or update these materials. These materials do not contain all information that may be required to evaluate, and do not constitute a recommendation with respect to, any transaction or matter. Any recipient of these materials should conduct its own independent analysis of the matters referred to herein.

“BMO Capital Markets” is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, Harris N.A. and Bank of Montreal Ireland p.l.c., and the institutional broker dealer businesses of BMO Capital Markets Corp., BMO Nesbitt Burns Trading Corp. S.A., BMO Nesbitt Burns Securities Limited and BMO Capital Markets GKST Inc. in the U.S., BMO Nesbitt Burns Inc. in Canada, Europe and Asia, BMO Nesbitt Burns Ltée/Ltd. in Canada, BMO Capital Markets Limited in Europe, Asia and Australia, and BMO Advisors Private Limited in India.

BMO does not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not intended to be used, and cannot be used or relied upon, for the purposes of avoiding any tax penalties and (ii) may have been written in connection with the “promotion or marketing” of the transaction or matter described herein. Accordingly, the recipient should seek advice based on its particular circumstances from an independent tax advisor.