This document discusses implementing Transparent Data Encryption (TDE) and additional compensating controls as an alternative method to encrypting primary account numbers (PANs) in a Microsoft SQL database to comply with PCI DSS version 3 requirement 3.4. TDE provides full data encryption with minimal performance impact. Additional controls like key management and access restrictions are also required. Compensating controls can meet the intent of PCI requirements if they provide similar defense and are above other requirements. TDE benefits include no schema changes and minimal performance impact, but it only encrypts data at rest and does not help secure communication. Proper key backups and access controls must be implemented for TDE.

1. ICT Conference, Kladovo - 15.05.2015
TDE vs. PCI DSS v3.0, SECTION 3.4
Author: MSc EE, Darko Mihajlovski – Head of IS Department
Co-author: MSc PM, Kiril Buhov – Head of IT Department
Co-author: MSc.B, Jani Nikolov – Head of PCS Department

2. The Full Story
IMPLEMENTATION OF
TRANSPARENT DATA ENCRYPTION (TDE)
AND ADDITIONAL COMPENSATIONAL
CONTROLS
AS
ALTERTATIVE METHOD REGARDING
ENCRYPTION OF PAN NUMBERS IN MICROSOFT
SQL DATABASE
(PCI DSS V3.0, SECTION 3.4)

3. Content
1. INTRODUCTION
2. PCI AND THE ART OF THE COMPENSATING CONTROL
i. WHERE ARE COMPENSATING CONTROLS IN PCI DSS?
ii. WHAT A COMPENSATING CONTROL IS NOT
iii. HOW TO CREATE GOOD COMPENSATING CONTROL
3. APPROACH TO THE PROBLEM
4. SQL SERVER 2008 TRANSPARENT DATA ENCRYPTION
OFFERS FULL DATA ENCRYPTION
i. USING MANUAL KEY MANAGEMENT
…………… And much, much, more .. rest of „ it “ …….

4. PCI DSS sense

5. The Message…
Proper” TDE implementation should cover the 3.4
requirement from PCIDSS v3, where it demands the
following: Render PAN unreadable anywhere it is stored
(including on portable digital media, backup media, and in
logs) by using any of the following approaches:
 One-way hashes based on strong cryptography (hash
must be of the entire PAN)
 Truncation (hashing cannot be used to replace the
truncated segment of PAN)
 Index tokens and pads (pads must be securely stored)
 strong cryptography with associated key-management
processes and procedures

6. The Problem …
The use of encryption to render cardholder
data unreadable is a highly effective and
readily accepted way to security data
The problem occurs when the
System/Application/Software Vendor
tells You that encrypting the PANs is
not a possible option.

7. Thinking Out of the Box…

8. The Art of Compensating Controls
 Compensating controls are a standard part of any security
posture.
 But what makes an effective compensating control?
 Every compensating control must meet four criteria before it
can be considered for validity.
• meet the intent and rigor of the original PCI DSS requirement,
• provide a similar level of defense as the original PCI DSS
requirement,
• be "above and beyond" other PCI DSS requirements,
• and be commensurate with the additional risk imposed by not
adhering to the PCI DSS requirement.

9. Where are compensating controls in PCI DSS
Compensating controls are not specifically defined inside PCI,
but are instead defined by you, and assessed by Your QSA
Thankfully, the PCI Council provides an example of a
completed compensating control in Appendix C of the PCI
DSS
Compensating controls are ultimately accepted by acquirers or
the card brands themselves, so even after putting all of this
information together you could face the rejection of your
control and a significant amount of expense re-architecting
your process to fit the original control.
This is where an experienced QSA can really help you ensure
your control passes the "Sniff Test." If it smells like a valid
control, it probably will pass.

10. What a compensating control is not ?
Compensating controls are not
a short cut to compliance.
In reality, most compensating
controls are actually harder to
do .....
.. it is up to the QSA performing the assessment
to decide to accept the control initially

11. MS TDE ...

12. MS TDE Benefits
 Implementation of TDE does not require any schema
modifications.
 Since the physical data files and not the data itself are
encrypted, the primary keys and indexes on the data are
unaffected, and so optimal query execution can be
maintained.
 The performance impact on the database is minimal.
 Microsoft estimates the performance degradation for TDE to be 3-
5%, while cell-level encryption is estimated to be 20-28%. Of course,
the impact well may vary, depending upon your specific environment,
and volume of data.
 The decryption process is invisible to the end user.

13. MS TDE Disadvantages
• Use of TDE renders negligible any benefits to be
gained from backup compression, as the backup
files will be only minimally compressed. It is not
recommended to use these two features together
on the same database.
• TDE does not provide the same granular control,
specific to a user or database role, as is offered by
cell-level encryption.
• TDE is available only with SQL Server
2008, Enterprise Edition and so will probably not be
available to all installations within your environment.

14. SQL SERVER 2008 TDE

15. Choosing to enable TDE, consider:
 TDE only secures data at rest and does not help to secure
the communication
 the certificate used to encrypt the data is required during
any attempt to decrypt the data
 complete and accurate backups of the certificate are
required to minimize the risk of data loss
 Backups of the database itself will be encrypted and will
require the certificate as well
 In the case of SQL Server, the TDE Database Encryption
Key must be replaced at least once per year

16. Using Manual Key Management
 Any user that can backup keys and certificates should
have write access to the backup folder location, but be
denied read access to that location
 Users with access to the key and certificate backup folders
should be denied access to any backups of the database
 The user who backs up the database should not be the
same user who backs up the certificates
 The key must be stored utilizing tamper evident media, or
in a tamper evident container.
 In some instances something as simple as a pressure-
sealed envelope may suffice, placed under dual control.

17. Physical Keys
Metal Safety Box
Metal Box 1 Metal Box 2
Passwords
Left part
(in Person 3)
Right part
(in Person 4)
Physical Keys
Person 1 Person 2
Person 5

18. in the environment, it should be fulfilled the following, too:
 SA disabled when using Windows auth. mode
 BUILTIN/Administrators group not a member of
sys-admin role
 Use of signed modules
 Role based access
 Hard segregation of duties, with matrixes of
segregations, evidences and etc.
 Hardening of the Database configuration, as
reference - Compliance with the Microsoft SQL
2008 Server Hardening Guide, Version 1.0.0, 19
May 2011

19. in the environment, it should be fulfilled the following, too:
 SQL Hardening – another 280 controls:
i. Operating System and Network Specific Configuration
ii. SQL Server Installation and Patches
iii. SQL Server Settings
iv. Access Controls
v. Auditing and Logging
vi. Backup and Disaster Recovery Procedures
vii. Replication
viii. Application Development Best Practices
ix. Surface Area Configuration Tool

20. Thank You
darko.mihajlovski@halkbank.mk
Tel.: +389 2 3240 804, Mob.: +389 71 30 55 31
kiril.buhov@halkbank.mk
Tel.: +389 2 3250 999, Mob.: +389 70 32 77 33
jani.nikolov@halkbank.mk
Tel.: +389 2 3250 966, Mob.: +389 71 327 917

21. Questions