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Should Banks Hash PII in Logs Instead of Masking It Under GDPR?

By Freedom251 Team · · 5 min read

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Hashing can be a better fit than masking when engineers need to correlate repeated events, but GDPR does not require banks to hash log data or prohibit masking. A hash may still be personal data if someone can link it to a person, and a stable hash deliberately preserves linkability. Treat it as a safeguard—not anonymisation—and minimise logged data, protect any attribution information separately, and test whether the whole log remains identifiable.

Hashing and masking solve different logging problems

Hashing transforms a value into an output that can be compared with other outputs. If the transformation is deterministic, the same input can produce the same output, allowing teams to spot repeated events associated with that value without routinely storing the original. That same consistency makes records linkable, which is useful for some operational investigations but remains a privacy consideration.

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Masking conceals some or all of a value in the representation being logged or displayed. Whether that is sufficient depends on what is retained elsewhere and whether the remaining information can identify someone. Neither the label “masked” nor the use of a hash, by itself, establishes that a log is anonymous or compliant.

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Choose based on what the log needs to do. If it must show a value to a person, masking may serve that display purpose. If it must link repeated events without routinely exposing the original value, a carefully protected, deterministic transformation may be considered. If neither is necessary, do not log the identifier.

What GDPR says about pseudonymised log data

GDPR Article 4(5) defines pseudonymisation as processing personal data so they cannot be attributed to a specific person without additional information, provided that information is kept separately and protected by technical and organisational measures. Articles 25 and 32 call for appropriate safeguards shaped by the processing and its risks; Article 32 names pseudonymisation and encryption as possible measures and requires regular testing of security measures. The regulation does not prescribe hashing for every identifier or ban masking. See the GDPR, especially Articles 4, 5, 25 and 32.

Pseudonymised data remain personal data when attribution is still possible using additional information. The European Data Protection Board’s Guidelines 01/2025 on Pseudonymisation explain this in a version issued for public consultation in January 2025. The assessment should account for additional information that could reasonably be expected to be available, not only a lookup table held by the bank.

A salted or keyed hash can make recovery of an original value more difficult when the relevant key or sufficiently long random salt and original data are kept confidential. But the hash can still be personal data, and protecting the transformation does not neutralise other identifying information in the record. The EDPB discusses this kind of technique in its 2025 guidance on blockchain; that is a technical example, not bank-log-specific guidance. See Guidelines 02/2025 on processing of personal data through blockchain technologies.

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Choose a transformation by the job the log must do

There is no universal best option. Decide whether correlation is necessary, whether the original must be recoverable, and what could happen if a key or other auxiliary information is exposed. The comparison below is a practical decision aid, not a scoring framework supplied by GDPR or the EDPB.

Approach Can repeated events be linked? Can the original be recovered? Main consideration
Do not log the identifier No, not by that identifier No original is stored in that field Best fit when the identifier is not needed for the log’s purpose; consider whether other fields still identify the person.
Mask the value Depends on what portion or representation is retained The original may remain available elsewhere or be inferable from what is shown Useful when a human-readable, partially concealed value serves the operational need; assess the complete record and access context.
Use a deterministic keyed transformation Yes, if the same input produces the same output Not by simply reading the output, but attribution may be possible with additional information Supports correlation while preserving linkability; protect the key and assess access, exposure and other available information.
Use a non-keyed hash Potentially, if the same input produces the same output The output does not itself display the original, but that does not establish that attribution is impossible Do not assume it is safe for identifiers: the hash may remain personal data, and context or additional information can affect identifiability.

These distinctions follow the GDPR’s risk-based approach and EDPB guidance on pseudonymisation and hashes. They do not establish that a particular hash function or configuration is suitable for a bank’s data. The EDPB also notes that hash functions can be used for data integrity; that use does not mean every hash protects confidentiality. See its data protection guide for small business and its explanation of anonymisation and pseudonymisation.

Design a bank-log redaction control

  1. Define the purpose of each field. Record why a field is needed for operations, security or audit. Remove fields that are not necessary. GDPR principles include purpose limitation, data minimisation, storage limitation and security.
  2. Map identifiers in context. Include direct identifiers and combinations of indirect identifiers. A timestamp, account metadata, IP address or rare event combination may help identify someone even if one field is transformed. Consider what additional information could reasonably be available.
  3. Decide whether stable correlation is necessary. If investigators or engineers need to connect repeated events for the same subject, a deterministic transformation may meet that need, but it also preserves linkability. If they do not need that connection, avoid creating it.
  4. Separate and protect attribution information. Keep keys, lookup tables or other information that enables attribution separate from the log store. Review who can access them and how exposure through operational access, backups, exports or retention could affect attribution.
  5. Assess the whole record and system. Check whether other fields, combined with information reasonably available inside or outside the organisation, could still identify a person. Transforming one identifier does not settle that question.
  6. Test and reassess the control. Article 32 calls for regular testing, assessment and evaluation of security measures. Revisit the measure as log contents, access patterns, systems or risks change.
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What a hash does not decide

A hash is not a general-purpose substitute for log governance. It does not decide which fields should be collected, how long logs should be retained, who should be able to access them, or whether a record can be attributed to someone from its surrounding context. Those questions must be addressed alongside the transformation under the GDPR principles and the bank’s specific processing purposes.

The cited GDPR and EDPB materials establish a general framework, not a complete standard for banking logs. They do not set one algorithm, key length, rotation interval or retention period for every bank. Applicable national law, financial-sector requirements, payment-card rules, supervisory expectations and contracts may add obligations; a specific design needs assessment against its actual data, threat model and operational purpose.

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application logsbanking securityData privacyGDPRpseudonymisation

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