Understanding FIPS 140-3 and Why It Matters

How can you be sure the cryptography protecting your organization’s most sensitive data is actually secure?

Every day, federal agencies rely on encryption to protect classified communications, mission data, and public information systems. Yet, as cyber threats grow in sophistication, many agencies still rely on cryptographic tools without fully understanding whether they meet the security standards required to protect critical systems.

Behind every secure network and encrypted transaction lies a set of rules that govern how encryption is built, tested, and trusted. These standards determine whether your systems can withstand real-world attacks and meet the strict requirements of government compliance.

For organizations that manage regulated or sensitive information, FIPS 140-3, established by the National Institute of Standards and Technology (NIST), provides a structured framework to ensure that encryption tools meet the highest levels of trust and reliability. 

But how well do you understand what that standard really requires?

What Does FIPS 140-3 Represent?

FIPS 140-3 is the federal government’s latest blueprint for trusted encryption. It defines how cryptographic modules in hardware, software, and firmware are designed, tested, and approved before they can protect sensitive but unclassified (SBU) or controlled unclassified information (CUI).

You can think of it as a building code for encryption systems. Just as engineers follow strict safety standards to ensure a bridge can carry its load, security teams follow FIPS 140-3 to confirm their encryption can withstand real-world threats. The standard gives agencies a way to verify that their cryptographic tools are not only functional but dependable under stress.

Whether it is a VPN that secures remote connections, a hardware security module (HSM) that manages encryption keys, or a cloud service handling federal workloads, each must use FIPS 140-3 validated components. This keeps all parts of the federal ecosystem aligned under a single, proven security benchmark.

The standard defines four levels of security, each addressing a higher level of assurance:

• Level 1 – Basic Security: Requires cryptographic modules to use approved encryption algorithms. It requires no specialized hardware or complex access controls. Level 1 is typically applied in general-purpose software where fundamental data protection is sufficient.
• Level 2 – Role-Based Control: Introduces access control based on user roles. The module must verify that users have valid roles before granting access. It may also include tamper-evident seals or locks that provide visible signs if the device has been altered or physically accessed without authorization.
• Level 3 – Identity-Based Authentication: Enhances protection by confirming each user’s unique identity rather than just their role. It also adds stronger physical safeguards to prevent direct access to cryptographic keys or internal components.
• Level 4 – Highest Physical Protection: Provides the strongest level of assurance. The module must detect and respond to any physical attempt to tamper with it and safeguard data even under extreme environmental conditions, such as temperature or voltage fluctuations.

These levels work like security clearance tiers. A public-facing application might need Level 2 validation, while a classified defense system could require Level 4. Each level ensures that encryption strength matches the sensitivity of the data it protects.

All cryptographic modules undergo testing under the Cryptographic Module Validation Program (CMVP), a joint program of NIST and the Canadian Centre for Cyber Security (CCCS). Once a module passes testing, it is listed on NIST’s CMVP validated modules list, which agencies use to confirm compliance before deployment.

In practice, FIPS 140-3 gives agencies and their partners a measurable way to confirm that the cryptographic foundations of their systems meet proven, federally recognized standards. It transforms encryption from a claim into a certification backed by testing, documentation, and accountability.

Why FIPS 140-3 Matters for Agencies

Relying on unvalidated encryption is like building a bridge without testing its pillars. It might stand for a while, but one weak point can bring down the entire structure. FIPS 140-3 prevents that collapse by confirming that the cryptographic foundation beneath every federal system is stable, tested, and capable of carrying the full weight of mission-critical data.

Its influence can be seen in five key areas:

1. Meeting Federal Security Requirements

Federal security policies, such as the Federal Information Security Modernization Act (FISMA) and the Office of Management and Budget (OMB) Circular A-130, require agencies to use FIPS-validated encryption for systems handling sensitive but unclassified information. This ensures that cryptographic modules are independently tested and approved by NIST through the Cryptographic Module Validation Program (CMVP). Failure to use validated encryption can lead to compliance issues and expose systems to unnecessary risk, a concern repeatedly highlighted in CISA advisories on outdated or improperly configured cryptographic components.

1. Strengthening Supply Chain Assurance

Supply chain vulnerabilities remain one of the leading causes of security breaches. The 2025 Verizon Data Breach Investigations Report (DBIR) found that nearly 30% of incidents involved a third-party or vendor component. Because government systems rely on a wide network of contractors and service providers, a single weak link can expose entire infrastructures. FIPS 140-3 reduces this risk by setting a uniform security baseline that every participant in the supply chain must meet. For instance, before a vendor can provide encryption technology for a federal contract, it must present a valid FIPS 140-3 certificate to confirm compliance. This shared requirement strengthens trust and helps prevent unverified or insecure cryptographic products from entering federal systems.

1. Maintaining Consistency Across Cloud and Hybrid Environments

Federal systems increasingly operate across complex infrastructures that connect on-premise and cloud resources. FIPS 140-3 ensures that encryption remains consistent across these environments by requiring all cryptographic modules, whether in a data center or a cloud platform, to meet the same validation standards. For instance, when an agency stores information in a secure cloud service, it must verify that the provider’s encryption modules are FIPS 140-3 validated before deployment.

This consistency is crucial as cloud environments remain prime targets for cyberattacks. Recent reports show that over 80% of data breaches in 2023 involved cloud-hosted data, and according to IBM’s Cost of a Data Breach Report, the average breach now costs about $4.4 million. These figures highlight why verified, standardized encryption is essential at every layer of federal infrastructure.

1. Enabling Transparent and Measurable Security

FIPS 140-3 establishes a clear process that allows agencies to verify the strength of their encryption tools with confidence. Each cryptographic module is tested by accredited laboratories under strict NIST guidelines, and the results are published in NIST’s public validation database. For example, before deploying a new secure communication platform, an agency can review the database to confirm that the encryption module used in the system has been fully validated. This transparency helps agencies confirm that the encryption they use meets federal standards and allows IT teams to base their security decisions on verified evidence rather than vendor assurances.

1. Preparing for Evolving Cryptographic Standards

Cybersecurity standards continue to evolve as new encryption methods, such as post-quantum cryptography (PQC), emerge. FIPS 140-3 gives agencies the flexibility to integrate these advancements without replacing existing infrastructure. Its emphasis on key management, authentication, and entropy testing strengthens system resilience against modern threats. Maintaining alignment with FIPS 140-3 helps agencies stay prepared for future cryptographic standards and remain compliant as federal security expectations continue to evolve.

In practice, the strength of any federal encryption strategy depends on how well it aligns with tested standards. To understand how those standards have evolved, it’s essential to look at how FIPS 140-3 builds on the foundation of its predecessor, FIPS 140-2, and the changes that define modern cryptographic validation.

FIPS 140-3 vs. FIPS 140-2: Understanding the Key Differences

FIPS 140-3 replaces FIPS 140-2, aligning U.S. cryptographic validation with modern technologies and international standards. While both frameworks serve the same goal, FIPS 140-3 introduces several improvements that make it more adaptable, precise, and globally recognized.

The National Institute of Standards and Technology (NIST) has announced that all existing FIPS 140-2 certificates will remain valid only until September 2026, after which they will move to the Historical List. From that point forward, only FIPS 140-3-validated modules will be accepted for new federal procurements and for compliance requirements. Agencies and contractors still relying on FIPS 140-2 must begin migrating now to ensure uninterrupted eligibility for government contracts and continued adherence to federal security standards.

Key distinctions include:

In summary, FIPS 140-3 modernizes cryptographic validation to address the realities of today’s connected, cloud-based systems. It refines how encryption modules are tested, maintained, and certified, giving agencies a stronger foundation for trusted security. But what does it take to implement these requirements and achieve full FIPS 140-3 compliance?

Steps to Implement FIPS 140-3 Compliance

Implementing FIPS 140-3 requires a structured approach that strengthens cryptographic assurance while maintaining smooth operations. Each step helps build a foundation of verified, secure encryption across systems, software, and vendors.

1. Conduct an Inventory

Start by identifying every cryptographic module in use across your environment. This includes hardware appliances, firmware, third-party libraries, and cloud encryption services. For example, agencies using OpenSSL or cloud-native key management tools such as AWS KMS should confirm which versions are FIPS-validated and whether noncompliant components exist.

1. Verify Validation 

Once identified, check each module against the NIST Cryptographic Module Validation Program (CMVP) database to confirm its certification status. This database lists every module that has successfully completed testing under FIPS 140-3. Verifying validation helps ensure that only approved components are deployed within your network.

1. Engage Vendors

During procurement or contract renewals, require vendors to submit proof of FIPS 140-3 validation for all cryptographic tools. For instance, when purchasing a new VPN appliance or security gateway, vendors should provide the corresponding CMVP certificate number to confirm compliance.

1. Enable FIPS Mode 

Activate FIPS-approved settings within operating systems, software, and hardware devices. Most major platforms support this feature. For example, AlmaLinux, Windows Server, and Cisco network appliances can operate in FIPS mode to ensure that only validated cryptographic algorithms are used.

1. Document and Audit 

Keep detailed records of FIPS-related configurations and validation certificates. Documentation should align with frameworks such as NIST SP 800-171, NIST SP 800-53, and FedRAMP baselines. Regular internal audits and third-party reviews help confirm ongoing compliance and reveal gaps before assessments or renewals.

By embedding these steps into daily operations, agencies stay prepared for future updates, including the shift toward post-quantum cryptography and other emerging federal security standards.

Final Thought

A single compromised cryptographic key can trigger widespread outages, disrupt essential services, and expose sensitive systems to risk, threatening public safety and operational stability. FIPS 140-3 helps prevent such incidents by requiring independent validation of the modules that generate, store, and manage encryption keys. When agencies rely on validated cryptography, they replace uncertainty with proven assurance and greatly reduce the risk that one hidden flaw could cause a far-reaching failure.

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Article Name

Understanding FIPS 140-3 and Why It Matters

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Learn what FIPS 140-3 requires and why validated encryption matters for federal agencies. Understand security levels and compliance steps.

Author

Humna Ghufran

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TuxCare

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