U.S. federal, state, and local governments face unprecedented cyberattack surges, primarily from ransomware groups and nation-state actors. This has prompted regulators to strengthen security frameworks with stricter compliance requirements. For MSPs and IT teams supporting government agencies and contractors, meeting these demands is critical—and FIPS 140-3 plays a central role.

What is FIPS 140-3?

FIPS 140-3 is the Federal Information Processing Standard that defines security requirements for cryptographic modules protecting sensitive data. Published by NIST on March 22, 2019, it supersedes FIPS 140-2 and keeps pace with evolving cybersecurity threats while aligning with international standard ISO/IEC 19790.

FIPS 140-3 ensures cryptographic modules—whether hardware, software, or firmware—meet strict security guidelines including encryption algorithms, secure key management, and tamper protection.

FIPS 140-3 vs FIPS 140-2: Key Differences

- International alignment: Based on ISO/IEC 19790:2012 for broader global acceptance
- Enhanced security: Stricter criteria for software security, lifecycle management, and side-channel attack defenses
- Improved resilience: Addresses vulnerabilities discovered since FIPS 140-2
- Modernized testing: Updated testing procedures and lab validation processes

FIPS 140-3 Security Levels

FIPS 140-3 defines four security levels matching different operational environments:

Level 1: Baseline Validation

- Approved encryption algorithms
- Standard production-grade hardware/software
- No physical tamper-evidence required
- Use case: General-purpose software in low-risk environments

Level 2: Physical Security + Role-Based Access

- Tamper-evident seals or coatings
- Role-based authentication
- Moderate physical protection
- Use case: Corporate IT systems in controlled environments

Level 3: Tamper-Resistant Protection

- Tamper-resistant enclosures
- Identity-based authentication
- Automatic key zeroization if tampering detected
- Use case: Government systems and critical infrastructure

Level 4: Maximum Security

- Full environmental protection against advanced attacks
- Active tamper detection and response
- Immediate cryptographic key zeroization
- Use case: Defense systems, military environments, high-risk locations

Mandates Requiring FIPS-Validated Modules

Several federal mandates and frameworks require or strongly recommend FIPS 140-3 validated encryption:

NIST SP 800-171

Outlines requirements for securing Controlled Unclassified Information (CUI) in non-federal systems. Explicitly mandates FIPS-validated cryptography.

FISMA

The Federal Information Security Modernization Act requires federal agencies and contractors to implement FIPS-validated cryptographic modules for protecting federal information systems.

CJIS Security Policy

The FBI's Criminal Justice Information Services Security Policy requires FIPS 140-2/140-3 compliance for systems accessing criminal justice information.

CMMC

The Cybersecurity Maturity Model Certification for DoD contractors requires FIPS-validated encryption at Level 3 and above.

FedRAMP

The Federal Risk and Authorization Management Program requires cloud service providers serving federal agencies to use FIPS 140-2/140-3 validated modules.

Why FIPS 140-3 Matters for MSPs

For MSPs serving government agencies and regulated industries, FIPS 140-3 compliance is often mandatory—not optional. It:

- Enables government contracts: Many agencies require FIPS validation
- Meets compliance requirements: Satisfies CJIS, CMMC, FISMA, and other frameworks
- Provides competitive advantage: Differentiates MSPs in regulated markets
- Ensures data protection: Validated encryption protects sensitive information
- Builds client trust: Demonstrates commitment to security best practices

How Datto Supports FIPS Compliance

Datto's all-new FIPS Mode for SIRIS 6 enables MSPs to deploy BCDR solutions that meet FIPS 140-3 requirements. This ensures backup and recovery systems use validated cryptographic modules—critical for government and regulated sector clients.

For MSPs and IT teams working in government, healthcare, finance, education, and other regulated industries, understanding FIPS 140-3 isn't just about compliance—it's about positioning your services to meet the security demands of today's most critical sectors.

Source: Datto Blog