Bank of Montreal Ireland plc.

the Central Bank has a clear line of sight to any potential risks, including operational risks, within regulated firms to ensure effective supervision and to assess the resilience and integrity of all firms and the financial sector as a whole. All firms must ensure the highest standards in identifying, properly managing and monitoring, and reporting on its operational risks in line with the Central Bank’s requirements. As a result of this investigation, the Central Bank reminds international firms, whether already established or seeking to establish a presence in Ireland, that they must put in place adequate policies, processes and controls necessary to comply with all licence conditions and regulatory obligations specific to their licence conditions to operate in Ireland.” BACKGROUND The Firm is a wholly-owned subsidiary of the Bank of Montreal and was established as a public limited company in Ireland in 1996. It is a credit institution licensed under Section 9 of the Central Bank Act, 1971 and is regulated by the Central Bank of Ireland. On 14 October 2015, the Firm wrote to the Central Bank informing it that the Firm had failed to submit the following three operational risk reports: - 31 December 2014 bi-annual report, 31 March 2015 quarterly report, and 30 June 2015 bi-annual report (the “Returns”). This was in breach of a condition of the Firm’s licence and was identified by the Firm through an internal audit of the Firm’s Operational Risk Management function.

Background to the Contraventions Contravention 1 In January 2013, the Central Bank raised queries with the Firm in respect of a particular financial exposure contained in a regulatory (large exposure) return. The Firm initially advised that this exposure was exempt from large exposure limits as it was an exposure to a client, which is an institution, and which was due to mature in less than one year. However, the Firm subsequently accepted that, due to a change in legislation, this exemption was not available to it. The Firm was relying in this regard on an exemption which was available under the Capital Requirements Directive, which was implemented in Ireland by the 2006 Regulations. However, when the 2006 Regulations were amended in 2010, as a result of the second Capital Requirements Directive (2009/111/EC) (“CRD II”) being implemented in Ireland, the rules relating to exemptions changed and this exemption was no longer available under the amended 2006 Regulations. This had resulted in the Firm submitting inaccurate large exposure returns to the Central Bank. The Firm subsequently submitted revised large exposure returns to the Central Bank taking account of the required amendment in respect of the particular exposure. On the basis of the revised figures provided to the Central Bank, the Firm was in breach of the large exposure limits in respect of the particular exposure.