AI Glossary
Data Residency
What is Data Residency?
The requirement that data be stored and processed within a specific geographic jurisdiction. Data residency rules are imposed by laws such as the EU's GDPR and various national data localisation statutes. When using cloud-based AI tools, professionals in regulated industries must verify whether data is processed in compliant regions.
Example in practice
A compliance officer at a European bank evaluating an AI vendor would confirm that the vendor processes all inference requests within the EU — satisfying data residency requirements before approving the tool for use with customer data.
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