Data Residency
The requirement that data be stored and processed within specific geographic boundaries. Under GDPR and German data protection law, personal data of EU residents must be adequately protected when transferred outside the EU, making EU/German data residency a competitive advantage for compliance platforms.
Data residency refers to the physical location where data is stored and processed. For financial institutions and regulated entities in the EU, data residency is a critical compliance consideration driven by GDPR's restrictions on international data transfers, sector-specific regulations like DORA, and national data protection laws.
Following the Schrems II decision by the European Court of Justice, transferring personal data to the US became significantly more complex. The EU-US Data Privacy Framework (2023) provides a new legal basis, but many organizations — particularly in financial services — prefer to keep sensitive data within the EU or Germany as an additional safeguard.
For compliance platforms handling regulatory evidence, policies, and audit data, German data residency means hosting on German or EU-based infrastructure (e.g., AWS Frankfurt, Azure Germany). This eliminates data transfer concerns, satisfies BaFin's outsourcing requirements, and provides a clear answer during vendor due diligence.
Related Terms
GDPR (General Data Protection Regulation)
The EU regulation governing the processing of personal data of individuals within the European Economic Area. GDPR establishes strict rules for data collection, storage, processing, and transfer, with penalties of up to 4% of annual global turnover for violations.
Data Processing Agreement (DPA)
A legally binding contract between a data controller and data processor that governs the processing of personal data. Required by GDPR Article 28, a DPA specifies the scope, purpose, and duration of processing, as well as the obligations of each party.
Data Protection Officer (DPO)
A designated role within an organization responsible for overseeing data protection strategy and GDPR compliance. Under GDPR, certain organizations are required to appoint a DPO, particularly public bodies and organizations that process sensitive data at scale.
DPIA (Data Protection Impact Assessment)
A process designed to systematically analyze, identify, and minimize data protection risks of a project or plan. DPIAs are required under GDPR Article 35 when data processing is likely to result in a high risk to the rights and freedoms of individuals.
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