A couple of things:
first, in artifactory be sure that what explained  here
<http://www.jfrog.com/confluence/display/RTF/Centrally+Secure+Passwords>  
is done, in particular make sure that your encryption policy is set to
"required".

Second, your issue seems more related to Maven that Artifactory. Maven has a
built-in client side security system to avoid locally storing cleartext
password. This system is briefly explained in the link above (that also
spots out some issues about security during transmission) and more in detail
explained  here <http://maven.apache.org/guides/mini/guide-encryption.html> 
.

The log you are showing says something about a settings-security.xml file,
the same involved in Maven client side encryption. Double check that maven
client side encryption is turned OFF or, if you really need it, that it is
set up correctly.

Hope it helps
A



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