Last updated: Nov 17, 2025, 05:25 PM UTC

Claude Code Data Handling Policy

Understanding Anthropic's CLI Tool Data Processing

Status: Complete
Version: 1.1
Last Updated: 2025-01-12
Applies To: All Knowcode Ltd projects using Claude Code CLI

Executive Summary

Transparency in AI-Powered Development

This document provides comprehensive details about how Claude Code CLI (Anthropic's agentic coding tool) handles data during development workflows. Understanding these policies is crucial for informed decision-making about AI tool adoption in professional environments.

Key Insight: Claude Code processes your code on Anthropic's servers, not locally, making data handling policies critical for enterprise adoption.

What is Claude Code?

Claude Code is Anthropic's terminal-based AI coding assistant that:

Understands your codebase through comprehensive file analysis
Executes routine tasks via natural language commands
Explains complex code with contextual understanding
Handles git workflows and development operations
Generates documentation and maintains code quality

Architecture Overview

graph TD A[Your Local Machine] --> B[Claude Code CLI] B --> C[Encrypted Connection] C --> D[Anthropic Servers] D --> E[Claude AI Models] E --> F[Response Processing] F --> C C --> B B --> A subgraph "Local Environment" A B G[Local File System] H[Git Repository] end subgraph "Anthropic Cloud" D E I[Data Processing] J[Temporary Storage] end style A fill:#f0fdf4,color:#000 style D fill:#f0f9ff,color:#000 style E fill:#fdf2f8,color:#000

Critical Understanding: Claude Code functions as a client application that sends your code to Anthropic's cloud infrastructure for AI analysis. No AI processing happens locally on your machine.

Data Transmission & Processing

What Gets Sent to Anthropic Servers

Data Transmitted to Anthropic

Complete File Contents

  • Entire source code files when read by Claude Code
  • Configuration files (package.json, .env examples, etc.)
  • Documentation and README files
  • Test files and sample data

Conversation Data

  • All prompts and natural language commands
  • Claude Code's AI responses and suggestions
  • Multi-turn conversation context
  • User feedback (thumbs up/down ratings)

System Context

  • File structure information
  • Git repository metadata
  • Development environment details
  • Error messages and debugging output

Data Remaining Local

Sensitive Credentials

  • Environment variables (unless explicitly read)
  • SSH keys and certificates
  • Database passwords and API keys
  • Authentication tokens (protected by default)

Local Storage

  • Claude Code configuration files
  • Session history (up to 30 days locally)
  • Permission settings and preferences
  • Cached responses and temporary files

Restricted Access

  • Parent directories (can't access files above working directory)
  • System files and protected directories
  • Network resources (requires explicit permission)
  • External services (unless explicitly approved)

Network Data Flow Architecture

sequenceDiagram participant Local as Your Machine participant CLI as Claude Code CLI participant Net as Encrypted Network participant Anthropic as Anthropic Servers participant AI as Claude AI Models Local->>CLI: Execute command CLI->>Local: Read requested files Local-->>CLI: File contents CLI->>Net: Encrypt & transmit Net->>Anthropic: Secure data transfer Anthropic->>AI: Process with AI models AI-->>Anthropic: Generated response Anthropic->>Net: Encrypted response Net->>CLI: Receive response CLI->>Local: Display results Note over Net: All data encrypted with TLS Note over Anthropic: Temporary processing only Note over AI: No local AI processing

🕒 Data Retention & Storage Policies

Retention Timeline

Standard Data Retention Schedule

Conversation Data

  • Immediate: Deleted from conversation history after session ends
  • 30 Days: Automatically deleted from Anthropic's backend systems
  • Local Storage: May be cached locally for up to 30 days for session resumption

File Contents

  • Processing Only: Sent to servers only during active analysis
  • No Persistent Storage: File contents not retained after processing
  • Temporary Memory: May exist in processing memory during AI analysis

Metadata & Analytics

  • Telemetry Data: Usage statistics and performance metrics
  • Error Reporting: Crash reports and debugging information
  • Feedback Data: User ratings and improvement suggestions

Zero Data Retention Options

Enterprise Privacy Options

Zero Data Retention Organizations

  • Available for enterprise API customers
  • Chat transcripts not stored on Anthropic servers
  • Local client may still cache sessions for 30 days
  • Requires special API key configuration

Implementation

# Configure Claude Code with zero retention API key
export ANTHROPIC_API_KEY="your-zero-retention-key"
claude-code --no-telemetry

Requirements

  • Enterprise API agreement with Anthropic
  • Special zero-retention API keys
  • Compliance with enterprise terms
  • May have usage limitations or additional costs

Training Data & Model Improvement

Default No-Training Policy

What Anthropic DOES NOT Use for Training

Model Training Exclusions

  • Your source code: Code files sent to Claude Code are not used for training generative models
  • Conversation history: Prompts and responses are not used to train AI models
  • Project-specific data: Your unique business logic, algorithms, and implementations remain private
  • Intellectual property: All proprietary code and information is protected from training use

Privacy Protection

  • Default policy across all Claude Code usage
  • No opt-out required - protection is automatic
  • Applies to both individual and enterprise users
  • Consistent with Anthropic's broader privacy commitments

Limited Training Data Usage

Permitted Training Data Usage

Feedback-Based Improvement

  • User ratings: Thumbs up/down feedback may be used to improve products
  • Not for model training: Feedback improves user experience, not AI model capabilities
  • Service enhancement: Helps improve Claude Code's interface and functionality
  • Voluntary participation: Only when users provide explicit feedback

Development Partner Program

  • Explicit opt-in: Users must actively join the program
  • Voluntary contribution: Participants can choose to contribute materials for training
  • Clear consent: All training use requires explicit user permission
  • Separate agreement: Governed by specific partnership terms

Example of explicit consent requirement:

# Users must explicitly opt-in to development partner program
claude-code --join-development-program
# This would require additional confirmation steps and legal agreements

Telemetry & Analytics

Data Collection for Service Improvement

Telemetry Services

Statsig Analytics

  • Usage patterns and feature adoption
  • Performance metrics and error rates
  • User interface interaction data
  • Feature effectiveness measurements

Sentry Error Reporting

  • Crash reports and stack traces
  • Performance monitoring data
  • Error frequency and patterns
  • Debugging and diagnostic information

Security Measures

  • All telemetry data encrypted in transit
  • Personal information sanitized
  • Aggregated data analysis only
  • No individual user tracking

Opt-Out Controls

Disable Telemetry

export DISABLE_TELEMETRY=true
claude-code

🛑 Disable Error Reporting

export DISABLE_ERROR_REPORTING=true
claude-code

Disable Bug Reporting

export DISABLE_BUG_COMMAND=true
claude-code --no-telemetry

Provider-Specific Defaults

  • Anthropic API: Telemetry enabled by default
  • AWS Bedrock: Telemetry disabled by default
  • Google Vertex: Telemetry disabled by default

Security & Encryption

Data Protection During Transmission

Encryption Standards

Network Security

  • TLS Encryption: All data encrypted in transit using industry-standard TLS
  • End-to-End Security: Secure connection from CLI to Anthropic servers
  • VPN Compatible: Works seamlessly with corporate VPN solutions
  • Proxy Support: Compatible with LLM proxies and corporate network infrastructure

Data Handling

  • No Persistent Storage: File contents not stored permanently on Anthropic servers
  • Memory Processing: Code exists only in processing memory during analysis
  • Secure Deletion: Temporary data securely removed after processing
  • Access Controls: Strict access limitations on server-side data handling

Local Security Measures

Built-in Protections

File Access Restrictions

  • Limited to working directory and subdirectories
  • Cannot access parent directories
  • Prevents accidental sensitive file exposure
  • Read-only permissions by default

Permission System

  • Explicit approval required for file modifications
  • User confirmation for command execution
  • Network request approval by default
  • Granular permission controls

Security Considerations

Potential Risks

  • Code and conversations sent to external servers
  • Network dependency for all AI features
  • Potential for data interception without proper network security
  • Risk of inadvertent sensitive data exposure

Mitigation Strategies

  • Use corporate VPN for additional security
  • Review file contents before allowing access
  • Implement network monitoring and logging
  • Regular security audits of usage patterns

Enterprise Considerations

Compliance & Governance

Enterprise Deployment Considerations

Due Diligence Requirements

  • Review Anthropic's enterprise terms and privacy policies
  • Assess data classification and sensitivity levels
  • Evaluate compliance with industry regulations (SOX, HIPAA, GDPR)
  • Implement appropriate data handling procedures

Risk Assessment Framework

  • Identify sensitive data that should not be processed by Claude Code
  • Establish clear guidelines for acceptable use cases
  • Implement monitoring and audit procedures
  • Create incident response plans for potential data exposure

Implementation Best Practices

Technical Controls

Configuration Management

  • Standardized environment variables
  • Centralized API key management
  • Consistent telemetry settings
  • Network security controls

Training & Awareness

Developer Education

  • Data handling policy training
  • Security best practices
  • Incident reporting procedures
  • Regular awareness updates

Monitoring & Audit

Oversight Framework

  • Usage pattern monitoring
  • Regular security assessments
  • Compliance reporting
  • Continuous improvement

📞 Contact & Support

Questions About Claude Code Data Handling?

Knowcode Ltd Internal Support
Data Privacy Concerns: privacy@knowcode.co.uk
Security Questions: security@knowcode.co.uk

Anthropic Resources
Claude Code Documentation: https://docs.anthropic.com/en/docs/claude-code
Privacy Center: https://privacy.anthropic.com
Security Information: https://docs.anthropic.com/en/docs/claude-code/security

Security Incident Reporting
Immediate Response: security@knowcode.co.uk

We're committed to transparent communication about AI tool data handling and security practices.

Policy Summary

This Claude Code Data Handling Policy provides comprehensive transparency about how Anthropic's CLI tool processes developer code and data, enabling informed decisions about AI tool adoption while maintaining security and privacy standards.

The result: Clear understanding of data flows, retention policies, and security measures for confident AI-powered development.

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