From Perimeter L3 Switch Security Technical Implementation Guide - Cisco
Part of Proxy ARP must be disabled on external interfaces
Associated with IA controls: ECSC-1
When proxy ARP is enabled on a Cisco router, it allows that router to extend the network (at Layer 2) across multiple interfaces (LAN segments). Because proxy ARP allows hosts from different LAN segments to look like they are on the same segment, proxy ARP is only safe when used between trusted LAN segments. Attackers can leverage the trusting nature of proxy ARP by spoofing a trusted host and then intercepting packets. You should always disable proxy ARP on router interfaces that do not require it, unless the router is being used as a LAN bridge.
Review the device configuration to determine if IP Proxy ARP is disabled on all external interfaces. If IP Proxy ARP is enabled on external interfaces, this is a finding.
Disable IP Proxy ARP on all external interfaces.
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