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That used to be true, but a recent alleged breach have cast some shadows over that strategy. The reported breach may have been some malicious logging software on one of those intermediary servers.

And, yes, some of us are being 'asked' to encipher everything, inside and out.

Once the auditors figure things out, I'd guess that full path enciphering (endpoint to endpoint) may be the minimum acceptable. Which presents other issues that may need more exotic malware countermeasures.

But that is just speculation on my part.
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We've had some long and involved discussions about auditors. (Check the archives.) The better they are educated, the more cooperative and understanding they're likely to be. Help them learn and understand and the benefits will far outweigh the problems, both long term and short term.

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