Can We Use Cursor, Cline & Copilot Under GDPR Safely?

There are a lot of questions around privacy when I talk with clients and before workshops, especially in health or fintech.

It's almost always the same "Can we use AI Coding tools (Cursor, Cline, Github Copilot, etc.) without breaking privacy or compliance rules?"

The short answer is yes, but only if the tools are set up carefully. Regulations are strict, but they don’t ban these tools. With the right settings, they can be used safely.

Regulatory Context

Financial institutions work under close supervision.

• EU AI Regulation: The EU Artificial Intelligence Act started to apply in February 2025. Full enforcement will follow in August 2026.

• BaFin: In Germany, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) is expected to oversee AI use in finance.

• High-Risk Systems: Credit scoring, risk modeling and insurance underwriting are considered high-risk. AI coding assistants are not in this group, but GDPR still applies.

• Fairness: AI models must not discriminate. The law covers both direct and indirect discrimination.

What Regulators Expect

When companies in the financial sector use AI, they need strong controls.

1. Data Governance: Clear responsibility for data and GDPR compliance.

2. Reproducibility and Documentation: Models must be easy to explain and audit.

3. Human Oversight: People must review results for high-risk use cases.

4. Risk Management: Plans are needed for errors or outages.

5. Vendor Checks: Providers must meet strict security standards.

6. Accountability: Management is responsible for compliance.

How Common AI Coding Tools Handle Data

Cursor

• Privacy Mode: When turned on, no code or prompts are stored or used for training.

• Local Embeddings: Code is turned into embeddings, and plaintext is deleted right after.

• Deletion Policy: Account data is removed within 30 days of account deletion.

• Compliance: Teams can make privacy mode mandatory.

Cline

• Local Execution: Everything runs on the company’s own infrastructure.

• Zero-Trust Setup: Code never leaves the company.

• GDPR: Cline meets SOC 2 Type I and GDPR requirements.

This setup works well for teams that need full control.

JetBrains AI Assistant

• Telemetry: Anonymous by default. Detailed sharing needs opt-in.

• Semantic Search: Optional storage of embeddings, no plaintext.

• External Models: If turned on, data may go to providers such as Anthropic or OpenAI.

Teams can disable all data sharing if needed.

Visual Studio Code and Other IDEs

• Telemetry Control: Telemetry can be fully turned off.

• Extension Review: AI often comes from extensions like GitHub Copilot. These should be reviewed.

• Local Options: Extensions such as Tabnine On-Premises keep everything in-house.

Codex CLI and Other CLI Tools

• Data Transfer: Many command-line tools send data to external servers.

• Recommendation: Use on-premises options for sensitive code.

Key Points for Financial Institutions

1. Not High-Risk: AI coding assistants are not high-risk under the AI Act.

2. Local Control: Cline and Cursor can keep data inside the company.

3. GDPR: All tools have privacy features or deletion options.

4. Transparency: Providers offer logs and admin controls.

5. Human Oversight: Developers must review AI output.

6. Security: Use encrypted connections and limit network access.

Talking with Customers

When I speak with teams in finance, these steps help make things clear:

• Show Knowledge of the Rules: Explain the risk-based approach.

• Assess Use: Separate high-risk cases from developer support.

• Explain Data Flow: Show where data goes and how to control it.

• Offer Options: Suggest local-first tools or privacy settings.

• Suggest Good Practice: Use clear rules, developer training, and audits.

Final thoughts

AI coding tools can be used safely in finance.

Privacy mode in Cursor, local use of Cline, and JetBrains settings give teams control over their data. Human review and good governance keep everything on solid ground. With these steps, financial institutions can work with AI assistants while staying in line with regulations.

Is GitHub Copilot GDPR compliant?

GitHub Copilot can be used in a GDPR-compliant way if settings are configured correctly. Organizations should limit or disable telemetry, review how prompts are sent to external servers, and apply internal approval processes. For sensitive work, using enterprise features or an on-premises setup can help reduce privacy risks.

How can financial institutions meet compliance requirements when using GitHub Copilot?

Copilot should be treated as a support tool, not a high-risk AI system under the EU Artificial Intelligence Act. Key steps include disabling unnecessary data collection, documenting its use, and ensuring that human review is part of the development process.

What is Cursor compliance?

Cursor includes a privacy mode that prevents prompts and code from being stored or used for model training. With this mode on, teams can meet GDPR and internal compliance standards. Many companies enforce privacy mode for all developers.

How does Cursor handle privacy and compliance?

Cursor deletes plaintext code after creating embeddings. It removes account data within 30 days of deletion and provides team-level privacy settings. These controls help regulated industries meet GDPR and other compliance requirements.

Is Cursor safe for regulated industries like banking and insurance?

Yes, when privacy mode is active and clear governance rules are in place. The tool limits data exposure and supports GDPR compliance, which fits typical financial sector requirements.

Is Cline GDPR compliant?

Cline runs all processing on the user’s own infrastructure and does not send code to external servers. This design makes it easier to meet GDPR and other privacy rules, especially for institutions with strict security policies.

How does Cline handle privacy and compliance?

Cline operates locally, using the company’s own API keys. This setup gives teams full control over their data. There is no external storage of code or prompts, which aligns with GDPR principles.

Is Cline safe for financial institutions?

Yes. Since all data stays inside the company environment, Cline can be used in regulated sectors like banking and insurance without exposing code to external providers.

Is Codex CLI GDPR compliant?

Codex CLI can be used in a GDPR-compliant way if it is configured carefully. Many versions of Codex CLI send prompts and code to external servers by default, which can be a privacy risk. To meet GDPR, companies should review how and where data is processed and limit external transfers.

How does Codex CLI handle privacy and compliance?

Codex CLI processes developer input and may forward it to an external model provider. If this happens, data may leave the company environment. To stay GDPR compliant, teams should consider hosting their own models or use a secure, on-premises gateway to keep sensitive code inside their network.

Is Codex CLI safe for financial institutions?

Codex CLI can be used in regulated sectors if it runs on local infrastructure or through a controlled environment. Companies should not use default settings that send sensitive data to external servers. A self-hosted setup is often the best option for compliance with GDPR and the EU Artificial Intelligence Act.

Also see:

• How to Keep Your Code Private With Cursor AI

• How to Add Custom Documentation to Cursor AI

• The Dark Side of Vibe Coding