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WindowSecurity.com - Microsoft's Encrypting File System, which is used to encrypt data on Windows 2000, XP and Server 2003 computers, relies on a public key certificate. If you don't have a public-key infrastructure, EFS can use a self-signed certificate. This is the default for using EFS on a standalone or workgroup computer. Implementing EFS within a domain with a PKI presents more complexity. In this article, we'll look at how to manage and use EFS in a Windows 2000 or Server 2003 domain.
EFS and digital certificates
In order to encrypt files and folders with EFS, a user must have a valid X.509 certificate. When a user attempts to encrypt data, EFS looks in the user's personal certificate store for an EFS certificate. If it doesn't find one, it attempts to enroll you for an EFS certificate with a Windows certification authority. If you're not using a domain account or if it is unable to request a certificate through a certification authority, EFS generates a self-signed certificate. However, there are problems inherent in using self-signed certificates:

• Unlike a certificate issued by a trusted third party like a CA, a self-signed certificate signifies only self-trust. It's sort of like relying on an ID card created by its bearer, rather than a government-issued card. Since encrypted files aren't shared with anyone else, this isn't really as much of a problem as it might at first appear, but it's not the only problem.


• If the self-signed certificate's key becomes corrupted or gets deleted, the files that have been encrypted with it can't be decrypted. The user can't request a new certificate as he could do with a CA.

Note: Because of the danger of data loss in the wake of a lost or corrupted key, you should ensure that all users export their private keys and maintain a copy offline (password protected for security). For better security, you can delete the key from the local system after exporting it. When the key is maintained on the system, an attacker who cracks the user's password will be able to decrypt the user's encrypted files. If the key is kept offline, the encrypted files will still be safe in this scenario, although it may present some inconvenience to users to have to import the key each time they want to decrypt their data.
EFS and the PKI
Although self-signed certificates can be used in a domain, the best practice is to only use EFS in a PKI environment. A Windows 2000 or 2003 server can be configured as a