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Regulatory compliance requirements of a cryptographic system

We're considering implementing a new cryptographic system, but we are concerned with how it fits in with legal and regulatory compliance. Can you advise?

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First, consider the new system in terms of cryptographic strength, and only then look at issues of regulatory compliance.  Generally speaking, you'll find that if you make a technically sound choice, you'll be fine when it comes to regulatory issues.

So, what should you look for when selecting a cryptographic system?  Here are a few basic guidelines:

  • Choose technology based upon a well-known algorithm.  "Security through obscurity" is something to avoid when it comes to cryptography.  Consider it a huge red flag if a vendor says they can't share the details of a proprietary algorithm because it would jeopardize their security.  Any cryptographic algorithm that is truly secure doesn't need to be kept secret, since the security of the algorithm rests in the secrecy of the key.
  • Use a reliable vendor. Along those same lines, choose a vendor that you're confident has strong software development practices and a good security track record. An improperly implemented cryptographic algorithm could undermine the security of the entire system.
  • Practice good key management. Choose a system that allows you to change the cryptographic keys periodically and provides strong key escrow mechanisms to recover keys that are lost. Systems that embed keys in the code are dangerous because you don't have the ability to change them if they are compromised, and there is a strong likelihood that the same key is shared among multiple vendors.

As I mentioned, following these best practices will help you choose an algorithm that will serve you well.  You'll then want to look at the legal and regulatory compliance requirements you operate under and ensure that you meet the specific obligations, such as encryption key length, algorithm choice and key management.

This was first published in October 2012

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