The password hashes stored on the system must have been generated using a FIPS 140-2 approved cryptographic hashing algorithm.
Systems must employ cryptographic hashes for passwords using the SHA-2 family of algorithms or FIPS 140-2 approved successors. The use of unapproved algorithms may result in weak password hashes more vulnerable to compromise.
How this relates to the STIG checklist: STIG vs SCAP benchmark.