Although sensitive data is encrypted before being sent to the Identity Manager server, Sun Microsystems recommends configuring PasswordSync to use a secure SSL connection (that is, an HTTPS connection).
For information on how to install imported SSL certificates, see this Microsoft Knowledge Base How-To article:
http://support.microsoft.com/kb/816794
Once you have installed PasswordSync, you can test that your SSL connection is properly configured by specifying an HTTPS URL in the PasswordSync Configuration dialog. See Testing Your Configuration for instructions.