This policy setting allows you to specify an encryption type for Office Open XML files. If you enable this policy setting, you can specify the type of encryption that Office applications use to encrypt password-protected files in the Office Open XML file formats used by Excel, PowerPoint, and Word. The chosen encryption type must have a corresponding cryptographic service provider (CSP) installed on the computer that encrypts the file. See the HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Cryptography\Defaults\Provider\ registry key for a list of CSPs installed on the local computer. Specify the encryption type to use by entering it in the provided text box in the following form:<Encryption Provider>,<Encryption Algorithm>,<Encryption Key Length>For example: Microsoft Enhanced Cryptographic Provider v1.0,RC4,128. If you disable or do not configure this policy setting, the default CSP is used. The default cryptographic service provider (CSP) is Microsoft Enhanced RSA and AES Cryptographic Provider, AES-128, 128-bit.Note: This policy setting does not take effect unless the registry key HKEY_CURRENT_USER\Software\Microsoft\Office\16.0\<office application name>\Security\Crypto\CompatMode is set to 0. By default the CompatMode registry key is set to 1.
Set the policy value for User Configuration -> Administrative Templates -> Microsoft Office 2016 -> Security Settings 'Encryption type for password protected Office Open XML files' to 'Enabled (Microsoft Enhanced RSA and AES Cryptographic Provider,AES 256,256)'.