Directory Importer does not work with LDAP Connector as a Source or Target Directory. It returns User Encryption Algorithms must match between directories error for every tentative.

This is happening because the ldap.user.encryption attribute for this Directory was not added to the cwd_directory_attribute table. This way, every call to if (!StringUtils.equals(targetDirectory.getEncryptionType(), sourceDirectory.getEncryptionType())) will fail because the getAttribute method will always return null.

Workaround:
Step 1: Find the Directory ID for the Directory Connector:

SELECT 
    id, 
    directory_name 
FROM 
    cwd_directory

Step 2: Add an ldap.user.encryption for the directory. Replace <DIRECTORY-ID> with the ID found on step 1.

INSERT 
INTO 
    cwd_directory_attribute 
    (
        directory_id, 
        attribute_value, 
        attribute_name
    ) 
    VALUES 
    (
        <DIRECTORY-ID>, 
        '', 
        'ldap.user.encryption'
    )