Is OpenAI's Australian Data Residency Enough for a Fund Manager?

Now that OpenAI offers Australian data residency, it is reasonable to ask whether the question of ChatGPT and client documents is settled for a fund manager. The honest answer has two halves. OpenAI's offer is real and it is useful. It also answers a narrower question than the one a fund manager's obligations ask.

What OpenAI now offers

OpenAI offers data residency, including in Australia, to eligible ChatGPT Enterprise, ChatGPT Edu and API customers. For ChatGPT Enterprise and Edu it applies to new workspaces. Business data on those plans, and on ChatGPT Team/Business, is not used to train models by default. Consumer free and Plus accounts are used for training unless the user opts out.

Two limits define what the offer covers. First, it is a residency for data at rest: where your content is stored. Model inference, the processing that happens each time a request is answered, still defaults to the United States. Second, it applies to the business plans above, not to the free, Plus or Team accounts that staff most often reach for on their own.

So for a firm on an eligible plan, stored content can sit in Australia, while each request may still be processed overseas. For a firm whose staff paste documents into personal accounts, none of it applies.

Why "stored in Australia" does not close the question

No general Australian law requires a fund manager's data to stay onshore; we set out why in our note on whether the law requires data to stay onshore. The obligations that do apply are about disclosure, security and responsibility, and residency at rest speaks to only part of each.

Law. Australian Privacy Principle 8.1 applies before personal information is disclosed to an overseas recipient, and section 16C makes the Australian entity accountable if that recipient breaches the Principles. If a request containing client personal information is processed by a provider overseas, whether that is a disclosure is a real question. The storage location does not answer it.

Guidance. The Office of the Australian Information Commissioner (OAIC) says that giving personal information to an overseas contractor is, "in most circumstances", a disclosure (APP Guidelines para 8.12). Its narrower view, that storage-only arrangements "may" be a use rather than a disclosure, depends on a binding contract and the entity keeping effective control (para 8.14). That reasoning was written about storage. Processing is a different activity.

Law. APP 11 requires reasonable steps to protect personal information, and since 11 December 2024 those steps "include technical and organisational measures" (APP 11.3). A policy telling staff not to use personal accounts is an organisational measure. Whether it holds depends on the technical ones behind it.

Guidance. The OAIC's own advice on commercially available AI products is direct: "As a matter of best practice, the OAIC recommends that organisations do not enter personal information, and particularly sensitive information, into publicly available generative AI tools, due to the significant and complex privacy risks involved."

If your clients are APRA-regulated

Many Australian fund managers answer to super fund trustees and insurers, and those clients carry CPS 234, APRA's information security standard.

Law. Where information assets are managed by a third party, an APRA-regulated entity "must assess the information security capability of that party" (CPS 234 para 16), and must "evaluate the design of that party's information security controls" (para 22). If your firm uses an AI provider on work that touches a trustee's information, expect the trustee's due diligence to ask about that provider, and about where requests are processed.

Responsibility stays with the licensee

Guidance. ASIC's position on outsourcing does not change for AI. "If you outsource functions that relate to your AFS licence, you remain responsible for complying with your obligations as a licensee: see s769B" (RG 104.34). Choosing a provider with Australian residency is a sensible step. It is not a transfer of the obligation.

What to put in writing

For any AI provider, including OpenAI on an eligible plan, get four answers in writing. Which plan is the firm on, and does the residency apply to it? Where is content stored? Where is each request processed? Who at the provider can access the content, and on what terms?

The same questions apply to us. BackPro deploys into the customer's own cloud account on AWS, Azure or Google Cloud, and residency follows the account and region the customer brings. Which model endpoints a deployment calls depends on the model provider configured for that firm, and we name them for each deployment. That puts the environment under the firm's control. It does not by itself make the firm compliant. BackPro does not hold SOC 2 or ISO 27001 certification.

The full treatment of disclosure, security and licensee responsibility, with each obligation cited to its source, is in our whitepaper, Where the data sits.

For a fund manager, the useful distinction is between where data rests and where it is processed. OpenAI's residency now answers the first for eligible business customers. The obligations above are mostly about the second, and about who remains responsible for both.