...from: http://www.cl.cam.ac.uk/techreports/UCAM-CL-TR-746.html

The snooping dragon: social-malware surveillance of the Tibetan movement Shishir Nagaraja, Ross Anderson

University of Cambridge

March 2009, 12 pages

Abstract In this note we document a case of malware-based electronic surveillance of a political organisation by the agents of a nation state. While malware attacks are not new, two aspects of this case make it worth serious study. First, it was a targeted surveillance attack designed to collect actionable intelligence for use by the police and security services of a repressive state, with potentially fatal consequences for those exposed. Second, the modus operandi combined social phishing with high-grade malware. This combination of well-written malware with well-designed email lures, which we call social malware, is devastatingly effective. Few organisations outside the defence and intelligence sector could withstand such an attack, and although this particular case involved the agents of a major power, the attack could in fact have been mounted by a capable motivated individual. This report is therefore of importance not just to companies who may attract the attention of government agencies, but to all organisations. As social-malware attacks spread, they are bound to target people such as accounts-payable and payroll staff who use computers to make payments. Prevention will be hard. The traditional defence against social malware in government agencies involves expensive and intrusive measures that range from mandatory access controls to tiresome operational security procedures. These will not be sustainable in the economy as a whole. Evolving practical low-cost defences against social-malware attacks will be a real challenge.

...and from the full text:

"We monitored the network traffic on its mail service in California and immediately observed that gaining access to emails would have been straightforward for anyone who could monitor this circuit, since the traffic was unencrypted. The email server could be contacted via POP, IMAP and HTTP in insecure modes, with passwords and mail passing in plain text. We also noted that some passwords chosen by [the users] were easily broken with a dictionary attack[...] in about 15 minutes [3].

The ‘standard’ security-consultant advice might therefore have been that [users] turn on TLS encryption to their mail server, and adopt a password policy. However such a superficial diagnosis and prescription would not have given much of a defence. It turned out that the attackers used a different route.

2.1 The attack vector Email attachments appear to have been the favoured strategy to deliver malicious pay-loads. This worked because the attackers took the trouble to write emails that appeared to come from fellow Tibetans and indeed from co-workers. The use of carefully-written email lures based on social context to get people to visit bogus websites has been called ‘social phishing’; in this incident, such email was used to spread malware and we therefore call this strategy social malware.

[...]

We then examined samples of email attachments from the local file systems them with the expert help of Mikko Hypponen at F-Secure Corporation, who determined that they could support file search and retrieval operations and also function as keyloggers. This confirms that the attackers had pretty much full access to the data on the infected computers. (In fact, one monk claimed that he actually ‘saw’ the bot open his Outlook Express and send infected attachments to others without any action on his part!)

[...]

... there is nothing in the modus operandi that prevents [these attacks] from being carried out by a smaller opponent. For example, we saw no evidence that the initial break involved wiretapping the backbone traffic from Dharamsala to California [...]. There was no need, given the tools and methods they actually employed. In fact, even a capable motivated individual could have carried out the attacks we describe here. Until recently, one might have assumed that it would take a ‘geek’ to write good malware, and someone with interpersonal skills to do the social manipulation. But the industrialisation of online crime over the past five years means that capably-written malware, which will not be detected by anti-virus programs, is now available on the market. All an attacker needs is the social skill and patience to work the malware from one person to another until enough machines have been compromised to complete the mission. What’s more, the ‘best practice’ advice that one sees in the corporate sector comes nowhere even close to preventing such an attack.

Thus social malware is unlikely to remain a tool of governments. Certainly organisations of interest to governments should take proper precautions now, but other firms had better start to think about what it will mean for them when social malware attacks become widespread. [...]

So what are the broader implications? How can social malware be dealt with?

[...]

One thing we predict, though, is that the social response to the threat of social malware will be slow and ineffective. This is because of elementary security economics. Banks will try to shift the blame to accounting system providers, and vice versa. The accounting vendors will advise customers to lock down user PCs, without being too explicit about how. Companies seeking redress will find themselves up against standard terms and conditions whereby both banks and vendors disclaim liability; in many markets they are oligopolistic suppliers, so may be able to defend these contract terms for some time. The banking regulators have shown that they believe whatever the banks tell them, that they are uninterested in protecting bank customers, and in any case they have no expertise in information security. The initial attacks will affect only a minority of firms, so the rest will prefer to blame the attacks on the victims’ negligence rather than acknowledging that their own policies need to change. Many companies will rely for advice on their auditors, and big audit firms, being ponderous and bureaucratic, give the same advice year-in year- out until litigation or regulation forces change. In short, we predict that the criminals who adapt social malware to fraud will enjoy many years of rich pickings. Indeed, if either of us were inclined to crime, this would be what we’d go for.

[...] 4 Conclusions [The attackers] used social phishing to install rootkits on a number of machines and then downloaded sensitive data. People in Tibet may have died as a result. The compromise was detected and dealt with, but its implications are sobering. It shows how difficult it is to defend sensitive information against an opponent who uses social engineering techniques to install malware.

We have described this social malware attack here and considered its consequences. [...] the techniques used are available even to private individuals and are quite shockingly effective. In fact, neither of the two authors is confident that we could keep secrets on a network- connected machine that we used for our daily work in the face of determined interest from a capable motivated opponent. The necessary restrictions on online activity would not be consistent with effective academic work.

Organisations that maintain sensitive information on network-attached computers and that may have such opponents had better think long and hard. The implications are serious already for people and groups who may become the target of hostile state surveillance.

In the medium term we predict that social malware will be used for fraud, and the typical company has really no defence against it. We expect that many crooks will get rich before effective countermeasures are widely deployed.

= - = - = - = ...from: http://www.nytimes.com/2009/03/29/technology/29spy.html?_r=1&th&emc=...

Vast Spy System Loots Computers in 103 Countries

By JOHN MARKOFF Published: March 28, 2009 TORONTO — A vast electronic spying operation has infiltrated computers and has stolen documents from hundreds of government and private offices around the world, including those of the Dalai Lama, Canadian researchers have concluded.

Tim Leyes for The New York Times The Toronto academic researchers who are reporting on the spying operation dubbed GhostNet include, from left, Ronald J. Deibert, Greg Walton, Nart Villeneuve and Rafal A. Rohozinski.

Vast Reach of ‘GhostNet’

In a report to be issued this weekend, the researchers said that the system was being controlled from computers based almost exclusively in China, but that they could not say conclusively that the Chinese government was involved.

The researchers, who are based at the Munk Center for International Studies at the University of Toronto, had been asked by the office of the Dalai Lama, the exiled Tibetan leader whom China regularly denounces, to examine its computers for signs of malicious software, or malware.

Their sleuthing opened a window into a broader operation that, in less than two years, has infiltrated at least 1,295 computers in 103 countries, including many belonging to embassies, foreign ministries and other government offices, as well as the Dalai Lama’s Tibetan exile centers in India, Brussels, London and New York.

The researchers, who have a record of detecting computer espionage, said they believed that in addition to the spying on the Dalai Lama, the system, which they called GhostNet, was focused on the governments of South Asian and Southeast Asian countries.

Intelligence analysts say many governments, including those of China, Russia and the United States, and other parties use sophisticated computer programs to covertly gather information.

The newly reported spying operation is by far the largest to come to light in terms of countries affected.

This is also believed to be the first time researchers have been able to expose the workings of a computer system used in an intrusion of this magnitude.

Still going strong, the operation continues to invade and monitor more than a dozen new computers a week, the researchers said in their report, “Tracking ‘GhostNet’: Investigating a Cyber Espionage Network.” They said they had found no evidence that United States government offices had been infiltrated, although a NATO computer was monitored by the spies for half a day and computers of the Indian Embassy in Washington were infiltrated.

The malware is remarkable both for its sweep — in computer jargon, it has not been merely “phishing” for random consumers’ information, but “whaling” for particular important targets — and for its Big Brother-style capacities. It can, for example, turn on the camera and audio-recording functions of an infected computer, enabling monitors to see and hear what goes on in a room. The investigators say they do not know if this facet has been employed.

The researchers were able to monitor the commands given to infected computers and to see the names of documents retrieved by the spies, but in most cases the contents of the stolen files have not been determined. Working with the Tibetans, however, the researchers found that specific correspondence had been stolen and that the intruders had gained control of the electronic mail server computers of the Dalai Lama’s organization.

The electronic spy game has had at least some real-world impact, they said. For example, they said, after an e-mail invitation was sent by the Dalai Lama’s office to a foreign diplomat, the Chinese government made a call to the diplomat discouraging a visit. And a woman working for a group making Internet contacts between Tibetan exiles and Chinese citizens was stopped by Chinese intelligence officers on her way back to Tibet, shown transcripts of her online conversations and warned to stop her political activities.

The Toronto researchers said they had notified international law enforcement agencies of the spying operation, which in their view exposed basic shortcomings in the legal structure of cyberspace. The F.B.I. declined to comment on the operation.

Although the Canadian researchers said that most of the computers behind the spying were in China, they cautioned against concluding that China’s government was involved. The spying could be a nonstate, for-profit operation, for example, or one run by private citizens in China known as “patriotic hackers.”

“We’re a bit more careful about it, knowing the nuance of what happens in the subterranean realms,” said Ronald J. Deibert, a member of the research group and an associate professor of political science at Munk. “This could well be the C.I.A. or the Russians. It’s a murky realm that we’re lifting the lid on.”

A spokesman for the Chinese Consulate in New York dismissed the idea that China was involved. “These are old stories and they are nonsense,” the spokesman, Wenqi Gao, said. “The Chinese government is opposed to and strictly forbids any cybercrime.”

The Toronto researchers, who allowed a reporter for The New York Times to review the spies’ digital tracks, are publishing their findings in Information Warfare Monitor, an online publication associated with the Munk Center.

[...]

In any case, it was suspicions of Chinese interference that led to the discovery of the spy operation. Last summer, the office of the Dalai Lama invited two specialists to India to audit computers used by the Dalai Lama’s organization. The specialists, Greg Walton, the editor of Information Warfare Monitor, and Mr. Nagaraja, a network security expert, found that the computers had indeed been infected and that intruders had stolen files from personal computers serving several Tibetan exile groups.

Back in Toronto, Mr. Walton shared data with colleagues at the Munk Center’s computer lab.

One of them was Nart Villeneuve, 34, a graduate student and self- taught “white hat” hacker with dazzling technical skills. Last year, Mr. Villeneuve linked the Chinese version of the Skype communications service to a Chinese government operation that was systematically eavesdropping on users’ instant-messaging sessions.

Early this month, Mr. Villeneuve noticed an odd string of 22 characters embedded in files created by the malicious software and searched for it with Google. It led him to a group of computers on Hainan Island, off China, and to a Web site that would prove to be critically important.

In a puzzling security lapse, the Web page that Mr. Villeneuve found was not protected by a password, while much of the rest of the system uses encryption.

Mr. Villeneuve and his colleagues figured out how the operation worked by commanding it to infect a system in their computer lab in Toronto. On March 12, the spies took their own bait. Mr. Villeneuve watched a brief series of commands flicker on his computer screen as someone — presumably in China — rummaged through the files. Finding nothing of interest, the intruder soon disappeared.

Through trial and error, the researchers learned to use the system’s Chinese-language “dashboard” — a control panel reachable with a standard Web browser — by which one could manipulate the more than 1,200 computers worldwide that had by then been infected.

Infection happens two ways. In one method, a user’s clicking on a document attached to an e-mail message lets the system covertly install software deep in the target operating system. Alternatively, a user clicks on a Web link in an e-mail message and is taken directly to a “poisoned” Web site.

The researchers said they avoided breaking any laws during three weeks of monitoring and extensively experimenting with the system’s unprotected software control panel. They provided, among other information, a log of compromised computers dating to May 22, 2007.

They found that three of the four control servers were in different provinces in China — Hainan, Guangdong and Sichuan — while the fourth was discovered to be at a Web-hosting company based in Southern California.

Beyond that, said Rafal A. Rohozinski, one of the investigators, “attribution is difficult because there is no agreed upon international legal framework for being able to pursue investigations down to their logical conclusion, which is highly local.”