Canadian Lawyer InHouse

43 CANADIANLAWYERMAG.COM/INHOUSE SEPTEMBER 2016 I n 2015, BMO Financial Group wanted to reduce its overall risk and increase ef- fi ciency by implementing an automated ap- proval process to identify and manage po- tential confl icts of interest arising from its employees' personal activities. BMO's compliance group transformed 13 paper-based processes for approving employee activities and private investments into a single electronic system. The bank now uses a new Managing Confl icts of In- terest system to review requests from North American employees for such things as out- side employment, directorships in outside organizations, volunteer activities and cer- tain personal investments. Employees access MCOI to complete an online questionnaire tailored to the type of activity for which approval is sought. Once complete, MCOI automatically routes the request to the employee's manager for review. The manager is provided with the ques- tionnaire and guidance on what to consider when approving or rejecting the request. If the manager approves, MCOI routes the request to the compliance department for review. MCOI then communicates the ap- proval decision by e-mail back to the em- ployee and manager. Approvals are also sent to other support areas for regulatory and re- porting purposes. The previous paper-based processes and data retention methods operated in silos with different levels of scrutiny and no abil- ity to provide aggregate reporting on the types of activities that were approved. The MCOI system simplifi ed, standardized and automated the process and provided a con- solidated book of record. Employees have a single access point to seek approvals and are provided a question- naire tailored to the type of request. The project was led by Eric Moss, senior vice president, deputy general counsel and chief compliance offi cer with BMO Finan- cial Group. "It's incredibly important for BMO Fi- nancial Group that we manage our confl icts of interest, and that we don't overly restrict employees from engaging in activities that are benefi cial to them and the bank," says Moss. "Having the automated process al- lows us to have more consistent results across the bank and enables us to prevent the employees from having to enter the in- formation multiple times." The automated process moves the work- fl ow through the approval stages. MCOI uses the enterprise HR hierarchy to identify which managers and compliance reviewers should receive an employee's approval request. To ensure timely review, each request is given a priority based on the nature of the activity. • Record of requests: MCOI communicates decisions by e-mail and archives approval requests so that employees, managers and compliance can review approval history. • Consolidated reporting: MCOI allows compliance to create reports showing the types of activities being undertaken in the enterprise or in individual groups. • Targeted reporting: MCOI routes ap- proval decisions to registration, insurance and regulatory reporting departments that require notice of approval decisions to update other records. MCOI's common process and approval guidance enhances oversight and reduces the likelihood that the approval of an activity in one operating group could create confl icts with clients for another operating group. The enhanced oversight also improved effi ciency by eliminating the need for em- ployees to provide the same information to different stakeholders related to the same proposed activity or investment. MCOI im- proves monitoring and testing capabilities for various supervision groups by providing a consolidated record from which to create periodic oversight activities. Other BMO groups responsible for insur- ance, governance and registrations are now directly connected to approval decisions and the information collected by MCOI, rather than relying on independently col- lecting the same information through dif- ferent processes. The MCOI platform that moves work- fl ow from employees to managers and com- pliance groups was used to build another enterprise system that required similar workfl ow patterns. A quarterly attestation process for operating groups was based off the same MCOI platform for use in regula- tory reporting. Overall, BMO's MCOI system has achieved consistent and consolidated man- agement of potential confl icts of interest. IH Front Row L to R – Valeria Sarkisova, Catherine Musselman, Tara Styles, Jackie Wei. Back Row L to R – Terry McCaig, Alicja Moryk, Adrienne Kossman, Carlo Pacheco, Tanuja Chei. Missing from photo: Eric Moss, Richard Fitzgerald, Robert Hyde, Robert Harcar, Melissa Mooney, Brett Black, Karen Shuff, Dennis Brown. Streamlined approval process for managing conflicts at BMO By Jennifer Brown ne bert ert er ert rt CATEGORY: Compliance DEPARTMENT SIZE: Large COMPANY: BMO Financial Group

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