Apple Remote Desktop 3 encrypts most tasks using AES 128-bit encryption. For more information on ARD's encryption, see this article.
ARD 3 does not encrypt the following tasks:
You may choose to encrypt Copy Items and Install Package tasks. Encryption can be enabled globally for these features in the Admin application's preferences. Also, encryption for these tasks may be enabled or disabled before executing the task.
Enabling encryption for these tasks may increase the time required to complete a task. LAN users will see see faster speeds without encryption enabled, but WAN users may not.
When dragging and dropping files, the item will be encrypted if the administrator chose to "Encrypt all network data" before starting the Control or if the "Encrypt network data when using Copy Items" checkbox is enabled. Otherwise, than the copy will not be encrypted.
When controlling computers, you can choose to encrypt passwords and keystrokes only or all network data. This encryption is done using an SSH tunnel. If the client does not have SSH access enabled, no encryption will be used.
VNC servers do not support Remote Desktop's encryption--you will see a warning when connecting to a VNC server. However, if you're using an SSH tunnel to connect, the keystrokes will be encrypted; if you're using SSH and the "Encrypt all network data" option when controlling, all network data will be encrypted.