Glossary

Layered ownership is a structure in which a company is owned through several intermediate companies, trusts or nominees, often across countries, which can make the real owner difficult to see.

Layering is the middle stage of money laundering, in which criminals move funds through many transactions, accounts or entities to hide their origin and make the trail hard to follow.

A legal basis for processing is the lawful justification an organisation must have before using personal data, chosen from a short list set by the privacy law, such as consent or contract.

Legal counsel is a lawyer who advises an organisation on its legal rights, duties and risks, either as an employee or as an outside firm, and represents it in disputes and negotiations.

A legal hold is an instruction, usually from the legal department, to keep all documents and data that may be relevant to a dispute or investigation and to suspend their normal deletion.

Legal persons are entities such as companies and foundations that can own property and enter contracts in their own right. Legal arrangements, such as express trusts, are relationships that hold assets for others without being separate entities.

Legal privilege is the right to keep confidential the communications between a client and their lawyer, made to seek or give legal advice, from being disclosed to courts, regulators or opponents.

Legal risk is the chance of loss from lawsuits, contract disputes, unclear or changing law, or failure to meet legal duties. It covers the cost of defending claims as well as of losing them.

A leniency programme offers a firm or individual in a cartel immunity from fines, or a reduction in them, in return for reporting the cartel and cooperating fully with the competition authority.

This ratio compares a bank's core capital with its total exposures, with no adjustment for risk. It works as a simple backstop to the risk-based capital rules.

Likelihood and impact are the two basic measures used to rate a risk: how probable it is that the event happens, and how serious the effect would be if it does.

A limitation of liability is a contract clause that caps, or excludes, the amount and types of loss one party must pay the other if something goes wrong under the agreement.

The liquidity coverage ratio divides a bank's easily sold liquid assets by the net cash it could lose in a 30-day stress. Under Basel III the minimum is 100%.

Liquidity risk is the risk that an organisation cannot meet its payment obligations when they fall due, or can do so only by raising cash at a heavy cost or selling assets at a loss.

Listing rules are the conditions a stock exchange or securities regulator sets for companies whose securities trade on its market, covering admission standards, disclosure, governance and continuing obligations.

Loan fraud is obtaining a loan by lying or concealing facts, or dishonestly using borrowed money for a purpose other than the one agreed, at the lender's expense.

A look-back review is a retrospective examination of past transactions, customer files or alerts, usually over a defined period, to find activity that was missed or mishandled and decide what must be reported or fixed.

The loss distribution approach is a statistical method for estimating operational risk capital by modelling how often loss events occur and how large each one is, then combining the two.

A loss event database is a central record of operational loss events, with details such as date, amount, cause, business line and recovery. Firms use it to understand patterns and to feed capital and risk models.

Loss given default is the share of an exposure a lender expects to lose if the borrower defaults, after counting what can be recovered from collateral, guarantees and the borrower's remaining assets.