
Microsoft uses standard SQL Server cell level encryption for a set of default entity attributes that contain sensitive information, such as user names and email passwords. The Field-level data encryption feature can help organizations meet the compliance requirements associated with FIPS 140-2 while configuring an integration between a Dataverse instance and Microsoft Exchange.
In fact, the Federal Information Processing Standard Publication 140-2, (FIPS PUB 140-2),[1][2] is a U.S. government computer security standard used to approve cryptographic modules FIPS 140-2 defines four levels of security, simply named « Level 1 » to « Level 4 ». It does not specify in detail what level of security is required by any particular application.

Since the version 9 of Dynamics 365, all new and upgraded organizations have the data encryption activated and the Administrators can change the encryption key in the Settings > Data Management > Data Encryption area.
The entity attributes that are configured for field-level data encryption are listed below:
- EmailServerProfile (IncomingPassword, OutgoingPassword)
- Mailbox (Password)
- Queue (EmailPassword)
- UserSettings (EmailPassword)
And for these fields, the following key points are not applicable:
- Auditing cannot be enabled on encrypted fields.
- Encrypted fields cannot be customized.
- Encrypted fields cannot be indexed.
- Encrypted fields can be set and updated by using standard Create, Update, and Delete methods.
- When doing a retrieve of an encrypted field’s value, a null is returned.