Data is encrypted before being exfiltrated in order to hide the information that is being exfiltrated from detection or to make the exfiltration less conspicuous upon inspection by a defender. The encryption is performed by a utility, programming library, or custom algorithm on the data itself and is considered separate from any encryption performed by the command and control or file transfer protocol. Common file archive formats that can encrypt files are RAR and zip.
CopyKittens encrypts data with a substitute cipher prior to exfiltration.
Epic encrypts collected data using a public key framework before sending it over the C2 channel. Some variants encrypt the collected data with AES and encode it with base64 before transmitting it to the C2 server.
Lazarus Group malware IndiaIndia saves information gathered about the victim to a file that is compressed with Zlib, encrypted, and uploaded to a C2 server. Lazarus Group malware RomeoDelta archives specified directories in .zip format, encrypts the .zip file, and uploads it to its C2 server. A Lazarus Group malware sample encrypts data using a simple byte based XOR operation prior to exfiltration.
Identify unnecessary system utilities, third-party tools, or potentially malicious software that may be used to encrypt files, and audit and/or block them by using whitelisting  tools, like AppLocker,   or Software Restriction Policies  where appropriate. 
Encryption software and encrypted files can be detected in many ways. Common utilities that may be present on the system or brought in by an adversary may be detectable through process monitoring and monitoring for command-line arguments for known encryption utilities. This may yield a significant amount of benign events, depending on how systems in the environment are typically used. Often the encryption key is stated within command-line invocation of the software.
A process that loads the Windows DLL crypt32.dll may be used to perform encryption, decryption, or verification of file signatures.
Network traffic may also be analyzed for entropy to determine if encrypted data is being transmitted.  If the communications channel is unencrypted, encrypted files of known file types can be detected in transit during exfiltration with a network intrusion detection or data loss prevention system analyzing file headers. 
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