Banking Without Borders

Product Training

Last Revised: June 2012

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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

Program Overview

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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

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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

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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

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Value Proposition – Differentiation Based on Relationship and Convenience

For You – Deeper Relationships For Your Clients – Convenience

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

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

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Overview of Different Models

Mutual Corporate Client (MCC) Client Of Correspondent Banking (CCB)

Account Structure

Bank to bank agreement

Client signs with BMO directly

Account are jointly owned/controlled by INSERT BANK NAME and your client

Documentation Forms

INSERT BANK NAME client signs the “Mutual Corporate client (MCC) Authorization”

INSERT BANK NAME client signs the appropriate BMO service agreement

INSERT BANK NAME and your client both sign the “Agreement for CCB Accounts”

INSERT BANK NAME to provide BMO with requisite account open material

Implementation

Forms

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

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 always operate with credit support from INSERT BANK NAME lines at BMO.

Prefunding is not supported

Information Reporting

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 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 NAMEBMO supports several models within our Banking Without Borders program

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Your Dedicated Team

Team Approach with Dedicated Resources

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

Relationship & Sales

Management

Program Management

PODTeam

Client Service: Munira Gohill, Brian Liu

Help Desk: Adam Hewitt, Maria Kadomtseva, Yousouf Mohoboob

Implementation: Khatra Haji, Frank Morelli

Documentation: Stephanie Chan

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Program Support - Web Site

Pitch Book Template

White labelled marketing materials

Fact sheets

Legal forms

Learning tools

Process Flows

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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

Product Training

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BWB: Full suite of world class treasury management solutions

Receivables Solutions:

LockboxIncoming Wire Payments

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

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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

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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.

Current Accounts

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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

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Feature Explanation

Credit Interest on balances 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.

Statements 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

Statement Cut-Off times Special cut-off times can only be for fixed dates (e.g., 15th of the month, weekly -- Friday only).

Account Features

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Feature Explanation

Pre-dated, post-dated and stale checks 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.

Insurance on deposit balances 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

Account Features

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Block Account Agreements

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

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

Concentrator Deposit Receivables

Services (CDRS)

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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

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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

FirstBank® Cash Concentrator

Services (FCCS)

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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

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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

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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

Online Banking for Business

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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

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Online Banking for Business: BenefitsIncreased 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

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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

Electronic Funds Transfer (EFT/ACH)

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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

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EFT: Features

Payment Files– Customer Released– Fixed Frequency

File creation and transmission

Option 1 Option 2File Creation Payment files – customer

release or fixed frequency

Accounting Software package

File Transmission Online Banking for Business – EFT module

Online Banking for Business – File Transfer Facility (FTF) module or GXS

Post Delivery Functions

Online Banking for Business – EFT module

Reporting Online Banking for Business – File Transfer Facility (FTF) module

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

EFT: Features

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EFT: Features

Feature Explanation

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.

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 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.

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.

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EFT: Benefits

Reduced Costs

Enhanced Customer/Vendor Relations

Improved Cash Management

Reduced risk of check fraud

Wholesale Lockbox

(WLBX)

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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 and funds availability, and improve the speed with which

information is received

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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

Wholesale Lockbox (WLBX)

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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

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Wholesale Lockbox: Features

Feature Explanation

Lockbox Processing Times 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.

Bulk Imaging Solutions 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.

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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

DirectCheque (DCH)

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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

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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

DirectCheque - Basics

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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.

DirectCheque - Basics

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DirectCheque - Benefits and FeaturesBenefits

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

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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

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DirectCheque - Reconciliation Plans

FTFHard copyPlan 5

PaperPlan 1

FTFPlan 2

FTFHard copyFTF

Plan 2 & 5

Positive Pay Match to Issue

Customer supplied check issue information

Print-out of all issued and paid

checks

Paid check Data

Account Reconciliation ReportReturnedSortAccount Plan

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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.

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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

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DirectCheque - Output Reports

Balance Sheet15021

Pay No Issue Report – Available for MICR Positive

Pay customers onlyPNI Report

Critical Value Transaction ReportCVT Report

Diagnostic Summary ReportCRP 92005-35

Recap of Posted ItemsCRP 92005-32

Daily Paid Reject ReportCRP 92003-13

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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

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DirectCheque: FeaturesFeature Explanation

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

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

Image Archives 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.

Tax and Bill Payments

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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.

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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

File Connectivity

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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

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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)

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GXS vs. FTF

Features

FTF via Online Banking for

Business GXSHigh Speed Internet Access Available AvailableServer to Server Transmission Not Available AvailableScripted Automated File Exchange Not Available Available

Encryption Available Available

Security 128 Bit Encryption128 Bit to VPN IPsec Encryption

Compliance Component e.g. SOX

No - Manual Operator required to process files

Yes – Encrypted, Automated, and can be Scripted

Ability to Transfer Large Files (Over 10 Mega Bytes)

Not designed to transfer large files Able

Technology Support / Maintenance

Supported and updated Supported and updated

Image Transfer (Future) Not Available Available

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Thank you!

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

Marcia Cowan – Sales Manager

Global Treasury Management

BMO Capital Markets

T. 416-867-2796

Marcia.Cowan@bmo.com

Sarah Cairns - Program Manager

Global Treasury Management

BMO Capital Markets

T. 416-643-4342

Sarah.Cairns@bmo.com

Appendices

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Banking in Canada

Canadian vs. U.S. Banking Systems

Banking in the U.S.

Our unique North American footprint helps you bridge the gap

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

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

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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

Understanding check fraud techniques

Altered date

Altered amount

Altered payee Forged drawer

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CPA Rules Regarding Check Fraud

Reason Time Frame to Return Via ClearingAltered item:

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

90 days

Counterfeit:

A reproduction of an original, legitimate checkNext business day

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

Next business day

Forged endorsement:

Signature/endorsement of payee has been forged

Unlimited (CPA)

Bills of Exchange Act requires drawer to notify drawee bank within 12 months

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E-Payments as a Target for Fraud

Initiation / Approval

Identity/passwords compromised at

initiation/approval points

Processing

Transmission

Bank systems/services/paymentinformation compromised

during processing

Payment file/account information

compromised during transmission

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CPA Rules Regarding EFT Exceptions

Reason Time Frame to Return Via ClearingUnauthorized debit with PAD agreement 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

Unauthorized debit without PAD agreement 90 calendar days after date on which the PAD was processed to payor’s account

EFT credit error correction 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

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Safe and Secure E-Commerce

What BMO does for you: Strong encryption Digital certificates Automatic log out after 10 minutes

of inactivity Complex security architecture Latest security patches

Initiation/Approval Transmission Processing

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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

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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

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Disclaimer

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“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.