SSE-KMS: Server-side encryption with AWS Key Management Service (SSE-KMS) provides robust encryption of data at rest, integrated with AWS KMS for key management and auditing.

Automatic Key Rotation: By enabling automatic rotation for the KMS keys, the system ensures that keys are rotated annually without manual intervention, meeting compliance requirements.

Logging and Auditing: AWS KMS automatically logs all key usage and management actions in AWS CloudTrail, providing the necessary audit logs.

Implementation:

Create a KMS key with automatic rotation enabled.

Configure the S3 bucket to use SSE-KMS with the created KMS key.

Ensure CloudTrail is enabled for logging KMS key usage.

Operational Efficiency: This solution provides encryption, automatic key management, and auditing in a seamless, fully managed way, reducing operational overhead.