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How are files transferred when using the SFTP SSH connector?

I'm looking to implement a SFTP SSH to SharePoint flow in my company but before I can proceed I need sign off from the information security team. The question they have asked me is when transferring a file is this file cached anywhere during the process? I guess they are worried that potentially sensitive data could be held somewhere "up in the clouds" if you cache my drift (pun intended).

 

Does anybody know the answer to this question please?

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