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They might have a model of version control in their head that predates distributed version control systems - I never used one myself, but the code base I work on still has scars here and there from the era when only one developer could have any single file checked out.

Not a misunderstanding, a requirement. If the developers cannot have that data (legal reasons? Secrets?) it must be deleted.

Probably has to be done outside git, though. Maybe one of the corporate virus scanners will let you definite a local signature.

It's rather simple: remove it from the origin repo using BFG Cleaner or whatever, then ask devs to delete and re-clone the repo. Not everything needs a complex technical solution.

Git clones the entire remote repository to each developer's machine. So, if you accidentally committed something you shouldn't have two weeks ago, everyone will now have a copy in their local repo. And you can't always just tell people to delete their local repos and start again, since they might have local branches they're working on, etc.