A Success Story of Transitioning to FIPS 140-3 from FIPS 140-2 

Company Overview 

Our client was looking to transition to FIPS 140-3 compliance, an important step for enhancing their security posture. Based in the United States, this financial organization had over 10000 employees and thousands of customers. Our client had a diverse customer base, including individuals, small businesses, and large institutions managing huge amounts of sensitive data, such as Personally Identifiable Information (PII), while dealing with daily financial transactions, which required protection with the best security practices. The company leverages advanced technologies, including encryption and secure key management, to safeguard sensitive information and enhance customer trust.

As the company grew rapidly, it was important to scale its infrastructure to meet the security requirements to adhere to the latest security standards. With a mission of providing exceptional financial service while prioritizing security, getting the latest compliance attestation would display the organization’s commitment to protecting its customer’s sensitive information.

Challenges

The introduction of FIPS (Federal Information Processing Standards) 140-3 has significantly improved security requirements for cryptographic modules and established a more comprehensive testing process, addressing legacy standards and unclear methodologies of FIPS 140-2. Our client faced multiple challenges during this assessment as we identified the gaps in their security practice. Below are the key areas that needed focus during the transition process:  

“Although the organization was compliant with the FIPS 140-2 standard, we discovered areas that needed improvements to meet FIPS 140-3 compliance, including the need for stronger key management practices, improved documentation of security controls, and enhanced testing procedures.” said one of our security architects who worked closely with our client on this project. They explained there weren’t well-defined requirements for all kinds of cryptographic modules.

As a result, while some modules met existing standards, others lacked essential specifications, such as precise key management protocols, the use of strong and secure encryption algorithms, and security testing methods. This lack of clarity led to inconsistencies in implementing cryptographic practices across different systems and increased the risk of vulnerabilities that could be exploited.  

It was also noticed that the mechanism for auditing, monitoring, and reporting security events wasn’t precise and detailed as needed, which is a concern in the context of FIPS 140-3. Auditing and monitoring of every process lacked comprehensive logging of security events, automated alerts for suspicious activities, and timely reviews of access controls. Additionally, effective reporting should provide clear insights into security incidents, enabling timely responses and informed decision-making. The current mechanisms lacked these critical features, which could hinder the organization’s ability to detect and respond to security threats effectively, impacting compliance with FIPS 140-3 standards. 

It was also reported that there was a lack of proper documentation of security processes and systems. Changes or updates made during all the lifecycle phases, such as development, testing, validation, deployment, and operation of the cryptographic modules, weren’t tracked properly. This could create issues while making audit reports. 

The key management practices they followed used an approved algorithm for key generation, but for FIPS 140-3, the key generation mechanism has to include mechanisms to ensure entropy and randomness, also mandating the use of approved RNG (Random Number Generators), key transmission was done over trusted path while FIPS 140-3 introduces the concept of the trusted channel allowing for more flexible and secure communication methods beyond direct user interactions. Security protocols were specified for these trusted channels, such as using approved encryption protocols (TLS). As per the new policy, the key also needs to be zeroized before deletion. The key management policies also needed to address all aspects of key life cycle including its roles and responsibilities.  

Our clients wanted to achieve level 4, the highest security level of FIPS 140-3 compliance. The absence of multifactor authentication practices presented a significant security risk for the client. FIPS 140-3 focuses on the importance of proper authentication mechanisms to protect access to cryptographic modules and sensitive data. This also meant having a secure user authentication mechanism in place. 

Most importantly, our clients were facing issues with finding a balance between operational efficiency and complying with the latest standard. For instance, while implementing automated processes to streamline their operations and reduce costs, they struggled to ensure that these systems met the strict requirements of FIPS 140-3. This often led to delays in deployment and increased operational risks, as they had to continuously adjust their processes to maintain compliance without sacrificing efficiency. To evaluate all the cryptographic components, identify gaps, and figure out a roadmap to mitigate those gaps by themselves created problems in day-to-day operations. They struggled to create a clear transitional plan; hence, they partnered with us to make this process smoother for them. 

Solution

We focused on making this transition a smooth process for our client. We started by defining the scope of this project, then identified the client’s data encryption capabilities, including data-at-rest, on transit, key and certificate management policies and understood the use case as per the organization’s security needs. We also identified the cryptographic modules and applications that needed to be compliant with FIPS 140-3 security requirements. We then reviewed, identified gaps in their existing policies and helped update their security policies, including cryptographic controls and standards, certificate and key lifecycle management systems, and data classification policies to align with FIPS 140-3 security requirements.

After this, we performed a thorough assessment of the client’s existing infrastructure, where we conducted workshops to assess the existing security framework of the applications in scope. Once we identified the gaps in their current cryptographic environment, we worked on creating a strategic roadmap to address those challenges and provide a transition plan to FIPS 140-3 compliance. Based on the gaps that we uncovered during our assessment, we developed a detailed plan to mitigate those gaps. We provided remediation for each gap to enhance the organization’s cryptographic security framework. 

We provided our client with a clear strategy to transition from FIPS 140-2 to FIPS 140-3 based on the identified gaps. We thoroughly evaluated the client’s existing security policies to ensure they effectively address all FIPS 140-3 cryptographic standards for all cryptographic modules. Cryptographic modules, in terms of FIPS, refer to hardware, software, or firmware components that implement approved cryptographic functions, including algorithms and key generation.  Our security architect added that this involved aligning the policies with the specific requirements outlined in the FIPS 140-3 standard, which defined security requirements, operational procedures, mechanisms such as auditing and monitoring, and compliance checkpoints for each module type, ensuring cryptographic security. 

We recognized the gaps in the client’s documentation of security procedures and security updates made to the infrastructure. We suggested that our client maintain a comprehensive logging system within their infrastructure, ensuring that all actions related to their cryptographic modules were accurately recorded and easily retrievable and that sensitive data within the logs was properly encrypted. 

We recommended that our client develop more suitable key management practices to address the problems in the client’s key management process. This includes zeroization of keys, which involves overwriting all sensitive data with zeros before its destruction. We also suggested establishing proper key revocation procedures and ensuring that all keys are securely stored and access-controlled. We worked closely with our client to define clear procedures and security requirements, such as the use of approved RNG to ensure randomness and entropy for secure key generation, key distribution using trusted channels with secure protocols like TLS 1.3 for secure communications, utilizing cipher suites that include AES and ChaCha20, and secure key destruction, all in line with FIPS 140-3 standards.

We proposed implementing a centralized key management system featuring periodic key rotation, secure key storage solutions (e.g., Hardware Security Modules), and applying identity-based access control principles to ensure that only authorized personnel can access sensitive keys, thus preventing unauthorized access and enhancing overall security. 

To achieve level 4 of security, we advised the client to enhance their authentication by implementing multifactor identity-based authentication across all systems interacting with cryptographic modules. This meant the authentication framework of our client should combine at least two factors: something you know (passwords, pins), something you have (OTP via phone or authenticator app, hardware tokens), and something you are (biometric data). We recommended binding authentication tokens with user sessions for improved logging of activities and security. This recommendation involved evaluating existing authentication methods and providing necessary details about additional factors to create a strong authentication framework. We provided guidance on selecting and deploying MFA solutions, such as security tokens and one-time passwords (OTPs).   

We have provided a detailed roadmap tailored to each use case and application within the project’s scope. This roadmap outlines both tactical and strategic approaches that guided the client in achieving their desired state of compliance with FIPS 140-3 security requirements. Following this transition plan will enable the client to enhance their security posture, effectively manage access controls, and ensure that their systems meet the necessary regulatory standards.

Impact

Our security architect conveyed that we could address the immediate gaps identified effectively for the successful transition to FIPS 140-3 compliance. The upgraded client’s cryptographic security framework has not only enhanced their current security posture but also positioned the organization for future resilience in an evolving threat landscape. Key improvements include the implementation of automated backups and recovery processes, which ensure data integrity and availability in the event of a breach or data loss. Additionally, enhancements to the incident response mechanism have streamlined the organization’s ability to detect, respond to, and recover from security incidents more effectively. We planned to close all the security loopholes, and doing so had a positive impact on their business. 

The client has significantly strengthened its security posture by upgrading policies to encompass all types of cryptographic modules, including all applications implementing cryptographic functions, updating specifications for encryption, key management and storage, backups, and the lifecycle of cryptographic modules, and implementing rigorous access control methods.  

The establishment of proper key management practices has made a great impact on the organization’s ability to protect sensitive data by enhancing data confidentiality, controlling access, facilitating compliance, and providing robust incident response capabilities, ultimately reducing the risk of data breaches and unauthorized access. With clear procedures for key lifecycle management, including secure generation, storage, and destruction, the client can mitigate risks associated with key compromises, such as unauthorized access to sensitive data that could lead to data breaches, financial loss, operational disruptions and reputational damage. 

The integration of multifactor authentication has provided an additional layer of security against unauthorized access. As cyber threats continue to evolve, particularly with the rise of phishing attacks and credential theft, MFA, such as using token-based authentication on top of passwords, will be critical in protecting sensitive information. 

The creation of detailed lifecycle assurance policies for cryptographic modules ensures that the organization maintains compliance with FIPS 140-3 and future regulatory requirements.

Conclusion

In conclusion, the transition plan we provided to our client help them achieve FIPS 140-3 compliance setting the foundation for enhanced security and operational resilience. This compliance framework establishes proper standards for cryptographic modules and ensures that the organization is equipped to handle sensitive information with the utmost integrity and confidentiality. By embracing future trends in cryptographic security, the client can continue to protect sensitive information while dealing with the challenges of the cybersecurity landscape. This proactive approach mitigates current risks, such as data breaches and unauthorized access, while positioning the organization as a leader in security best practices and encouraging stakeholder trust and confidence.

The integration of FIPS 140-3 compliance into the organization’s operational framework has not only streamlined security processes but has also enabled the adoption of advanced cryptographic techniques. Looking ahead, the organization plans to build on these achievements by further enhancing its cryptographic capabilities. This commitment to continuous improvement will ensure that the organization remains at the forefront of cybersecurity, ready to tackle emerging challenges while maintaining the highest security and compliance standards. 

If you need help transitioning your organization to FIPS 140-3, we are here to help.