Correct Answer: Move the EC2 instances to private subnets and create a VPC endpoint for Amazon S3. Update the subnet route tables to send traffic to S3 through the endpoint.

Explanation: This solution ensures traffic stays within the AWS network. An S3 VPC endpoint allows private access to S3 without using public IPs, NAT, or the internet gateway. It satisfies compliance and security requirements while keeping the architecture simple and isolated from the public internet.

Why the other options are incorrect:

NAT gateway still routes traffic through the internet, violating the private transfer policy.
Restricting security groups limits destination but does not change the public routing path.
AWS Direct Connect is unnecessary for intra-VPC traffic and introduces cost and complexity.

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