Create a CodeCommit repository in the security account using AWS Key Management Service (AWS KMS) for encryption. Require the development team to migrate the Lambda source code to this repository.

Store the API key in an Amazon S3 bucket in the security account using server-side encryption with Amazon S3 managed encryption keys (SSE-S3) to encrypt the key. Create a presigned URL for the S3 key, and specify the URL in a Lambda environmental variable in the AWS CloudFormation template. Update the Lambda function code to retrieve the key using the URL and call the API.

Create a secret in AWS Secrets Manager in the security account to store the API key using AWS Key Management Service (AWS KMS) for encryption. Grant access to the IAM role used by the Lambda function so that the function can retrieve the key from Secrets Manager and call the API.

Create an encrypted environment variable for the Lambda function to store the API key using AWS Key Management Service (AWS KMS) for encryption. Grant access to the IAM role used by the Lambda function so that the function can decrypt the key at runtime.