Japanese theft from Standard Bank – leak?

The news about the Japanese theft from Standard Bank using roughly 1,400 cash withdrawals from Japanese bank ATMs raises serious questions about Standard Bank’s security and the possibility of a data leak.

Alicia’s recent article about cyber risks is very timely. News of a massive Japanese theft from Standard Bank highlights some of the risks Alicia wrote about.

Defeat cyber risks, use the Force

At the same time, this is an interesting attack primarily because of its simplicity. Usually credit card fraud attacks are based on stolen credit card information and/or cloned cards but chip and PIN cards (which are probably the most prevalent type of credit card in use in South Africa these days) are usually too secure for that to work.

What went wrong?

It’s one thing to clone a credit card and swipe it as a way to obtain some sort of benefit but withdrawing so much cash means the thieves had access to a substantial number of PIN codes and were able to draw roughly R14 000 from each ATM.

It’s not clear if that is per withdrawal or cumulatively from each ATM. If it is per withdrawal, there could be a problem with withdrawal limits set for the cards which were cloned.

Instead, the Japanese theft uses something much simpler and old school: PIN codes to enable the thieves to draw cash from Japanese bank ATMs. According to Moneyweb:

Police believe more than 100 people may be involved, according to the report, which quotes anonymous sources as saying that approximately 14 000 transactions were used to draw a maximum of 100 000 yen (R14 247) from seven bank ATMs.

Was Standard Bank hacked?

The big question, though, is how the thieves obtained the PIN codes to facilitate the crime? This question remains unanswered, for now, but early indications point to an exploit or security breach of some kind at the bank.

According to The Mainichi, which broke the story in its article titled “1.4 bil. yen stolen from 1,400 convenience store ATMs across Japan” –

Police suspect that the cash was withdrawn at ATMs using counterfeit credit cards containing account information leaked from a South African bank.

This story is still developing so expect to hear more, particularly about this alleged leak.

Postscript:

I assumed the credit cards were cloned but some commentators have suggested that these are issued credit cards, although with fictitious card numbers.

Postscript 2 (2016-05-24)

According to Ars Technica:

The theft took place on May 15, a Sunday, between the hours of 5am and 8am. ATMs were targeted across Tokyo and 16 other prefectures in the country. Police said they believe up to 100 people were involved in the heist, according to the Kyodo News Agency. The thieves apparently went to ATMs like those found in 7-11s across Japan and swiped counterfeit South African credit cards, created using information from cards issued by South Africa’s Standard Bank.

So the thieves created fake cards using information from issued credit cards? I have a feeling we are going to learn something important about how credit cards work and how they are processed by banks by the time the key details of this story emerge.

Image source: Pixabay

Defeat cyber risks, use the Force

Cyber risks are a real and present danger. They are often hidden and misunderstood so I wrote this article just for you. I’m also a Star Wars fan and couldn’t resist the Force.

When I think of the words “cyber risks”, I don’t think of anything immediately tangible nor anything immediately threatening. What those words, (especially together) mean to me is far more ethereal and a lot more entertaining…

My thoughts digress to a Jedi fighting a Sith, Ewoks and Jabba the Hutt. I think of Darth Vader – the famous “I am your father” scene. All very “other wordly” and “galactic”. Something a true Star Wars fan can fully and truly appreciate. But this is not Star Wars and I am no Princess Leia.

“Luke, I am your father”

Just like the “Luke I am your father” scene inevitably shocked Luke into a new reality, growing Cyber Risks are doing the same for businesses across the Globe. And that is actually my point – Is Cyber Risk really in a “Legality” far, far away or is it closer to home than we think?

What do I mean? Well I will give you some examples.

In the Price Waterhouse Cooper’s January 2016 Top Issues publication, the following was outlined

“The biggest challenge for insurers is that cyber isn’t like other risks. There is limited publicly available data on the scale and financial impact of attacks and threats are very rapidly changing and proliferating. Moreover, the fact that cyber security breaches can remain undetected for several months – even years – creates the possibility of accumulated and compounded future losses.”

And

“Cyber risks are increasingly frequent and severe, loss contagion is hard to contain, and risks are difficult to detect, evaluate, and price.”

On the Freshfields, Bruckhaus, Deringer website, a world-wide legal practice on their “Cyber crime can derail your company” page, they state the following:

“Whatever your industry, cyber security is a worldwide concern. As you hold more data, and your staff use their own devices, you can become more vulnerable to security breaches.

Those breaches can have significant legal and reputational effects upon companies. As shown by recent data breaches, and related litigation, this is not just an IT issue.”

There has even been a full article written on the Hedgeweek website entitled “Cyber security – a Global Persceptive” ,(the title alone has a sense of doom and seriousness about it). This article sets out the lengths the US Legislature is taking to ensure the protection of companies against cyber-crime, which includes the House of Representatives passing a new cybersecurity bill –

“the Protecting Cyber Networks Act (PCNA) – to allow file sharing between government intelligence agencies and private companies and raise the overall awareness of hacking.”

Cyber Risks – a clear and present danger

If it is not clear already, let me spell it out for you – cyber risks are here. It is a risk that is not only very real but one that can be truly devastating to a company should their systems and data be hacked thereby revealing company trade secrets. Can anyone say “huge liability claim”?

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Source: Boss Fight

Speaking of huge liability claims, Insurers and Re-insurers are discovering that there is a growing and real need to insure Companies across all industries against these potentially devastating risks and that means increased premiums for those Insurers and Re-insurers eager to tuck into a slice of the proverbial cyber pie. According to PWC –

“Cyber insurance is a potentially huge but still largely untapped opportunity for insurers and reinsurers. We estimate that annual gross written premiums will increase from around $2.5 billion today to $7.5 billion by the end of the decade.”

But thats Insurance and therefore inevitably a safety net should things go awry but where Law is concerned, prevention is often better than the cure.

Understanding leads to prevention

In order to even start combating Cyber Risk, we first need to understand what it actually entails. According to Kennedy’s “Cyber risks – an insurance perspective” article  cyber risks can be understood quite simply:

“Two of the most common forms of cyber risks are Cyber-attacks and data breaches. Cyber-attacks can take many forms:

Hacktivism – where a company’s website is hacked into and used as a platform to promote views.

Denial of service attacks (DoS) – when a site is bombarded with millions of emails from a bogus source, thereby blocking access to the site by legitimate users. This happened to the Amazon and PayPal sites recently, when they were forced to stop online trading as a result of DoS attacks by people protesting against the arrest of Julian Assange.

Cyber-extortion – where attackers threaten to carry out a DoS attack or to implant viruses in a company’s website or network.

Data breaches can occur as a result of human error – for instance, unencrypted data is lost or sent to the incorrect recipient – or by hackers, employees or others stealing or otherwise gaining access to sensitive data.”

A call to arms

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Source: Pexels

What is abundantly clear is that this is not just an IT issue, something you can “dial a nerd” for and consider your job done. What this is, is a global risk. Something as legal practitioners we need to get ahead of. It is all well and good to have the insurers and reinsurers making their mark in this currently untapped risk market but we need to prevent the risk from happening in the first place. A seemingly daunting and almost impossible task to be sure. However with everything, you can tackle this “one bite at a time”.

With that in mind, how do we fight Cyber Risks?

  1. Identify the specific risks to the business and what needs the most protection. For example, in a company like Coke, intellectual property might be the most important asset which is vulnerable to cyber attack. For Bid or Buy, the stability of online platforms and the security of customers’ personal data may be paramount.
  2. Assess the potential consequences of the various types of possible attack. Essentially, what would the impact to the company’s reputation be, to its share price, to its goodwill? What is the litigation risk? What would be the impact on the business be if its activities were disrupted for a short or for a sustained period of time? How much risk can the business accept? This is a really important balancing act and from a legal perspective will need some risk management. For example, ensure senior management in all areas of the business are fully aware of the IT security and all the risks that potentially exist.
  3. Devise a strategy to address the identified cyber risks. This is likely to involve preparation of both a cyber risk management plan and an incident response plan. A cybersecurity review is vital.
  4. Ensure that the systems and security measures are properly and regularly tested (here you can most certainly get a hold of “dial a nerd”),
  5. Implement appropriate staff training and education. Many attempts to compromise information involve what is known as “social engineering”, which is effectively the skilful manipulation of people and human nature to trick information out of a company. Online social media platforms need to be properly monitored and staff trained here according to what they can say and what they can’t say with regards to the company online. A social media policy will most definitely be needed. Proper training can help reduce or prevent completely this type of risk.

Clearly, cyber-security is more than just tightly worded policies and endless procedures. It is a legal risk management exercise which undoubtedly entails keeping your eyes wide open, ears to the ground and your paper trail well and truly up to date -if there is any significant attack, the legal team needs to be properly armed with their trail of governance to ensure real combative steps are taken.

“May the force be with you” indeed does come to mind.

Featured image credit: Paul Jacobson, licensed CC BY NC SA 2.0

WhatsApp encryption guarantees your privacy

WhatsApp encryption is now complete and, when using an up-to-date version of WhatsApp, virtually guarantees your privacy with end-to-end encryption and forward secrecy.

WhatsApp_Logo_1Whether you realise it or not, WhatsApp encryption now guarantees your privacy. All you need to do is make sure you are running the latest version of the immensely popular chat app on your mobile device. WhatsApp’s founders published a blog post yesterday announcing the culmination of year and a half journey with Open Whisper Systems:

WhatsApp has always prioritized making your data and communication as secure as possible. And today, we’re proud to announce that we’ve completed a technological development that makes WhatsApp a leader in protecting your private communication: full end-to-end encryption. From now on when you and your contacts use the latest version of the app, every call you make, and every message, photo, video, file, and voice message you send, is end-to-end encrypted by default, including group chats.

WhatsApp encryption, in itself, isn’t new. Open Whisper System’s Moxie Marlinspike summarised the fruit of this journey in his blog post titled “WhatsApp’s Signal Protocol integration is now complete”:

As of today, the integration is fully complete. Users running the most recent versions of WhatsApp on any platform now get full end to end encryption for every message they send and every WhatsApp call they make when communicating with each other. This includes all the benefits of the Signal Protocol – a modern, open source, forward secure, strong encryption protocol for asynchronous messaging systems, designed to make end-to-end encrypted messaging as seamless as possible.

We are still in a transitionary phase at the moment. Conversations will only be encrypted if all the parties to a conversation are using an updated version of WhatsApp. When they are, though, the result is pretty impressive:

  • WhatsApp conversations (voice and text) are fully encrypted. This includes all the attachments. WhatsApp itself can’t decrypt the messages and its servers really only pass the encrypted messages between users.
  • Because WhatsApp uses different encryption keys for each session, older messages can’t be decrypted even if someone manages to seize a current encryption key (this is known as “forward secrecy”).
  • Once your conversations with contacts are encrypted, they remain encrypted and downgrading to an earlier version of WhatsApp won’t make your messages available in an unencrypted form.
  • For the time being, you can see which of your conversations are encrypted by looking to see whether your contact/s is/are using an updated version of the app. You will also be shown a message that indicates that your conversations with a contact are encrypted going forward.

One step for fully encrypted conversations

We have had encrypted messaging apps for a little while now. Apple’s Messages app and the popular Telegram app are encrypted to a degree although neither are encrypted end-to-end like WhatsApp, apparently.

Cade Metz wrote a fascinating article for Wired titled “Forget Apple vs. the FBI: WhatsApp Just Switched on Encryption for a Billion People” which gives a fair amount of background into this development. As he pointed out, the scale of this is remarkable when you consider just how big WhatsApp is:

More than a billion people trade messages, make phone calls, send photos, and swap videos using the service. This means that only Facebook itself runs a larger self-contained communications network.

One of the challenges implementing encrypted solutions is simplifying the process for users enough so the process itself isn’t a deterrent. This migration is literally as simply as updating your app and prompting your contacts to do likewise to ensure that your conversations are encrypted.

Why encrypted WhatsApp is a big deal

Encrypted WhatsApp messages about family dinner plans may not seem a high priority. Consider that WhatsApp is one of the biggest social and communications platforms on the planet used by friends, families, business people and activists, alike. Suddenly you can see the benefits of a service that easily implements strong encryption and protects conversations that are truly sensitive and could, literally, save lives.

The flip side is also true: terrorists and criminals could also use WhatsApp to hide their conversations and may well be doing that. Bear in mind, though, that WhatsApp isn’t the only encrypted communication solution. Publicly available solutions have been around for years and if the bad guys aren’t using WhatsApp, they have many other options available to them.

This is a more significant development for the rest of us because it means that we are less vulnerable to digital attacks by the bad guys. It also means that people who need an assurance of privacy can have it. As the WhatsApp team pointed out in their blog post:

We live in a world where more of our data is digitized than ever before. Every day we see stories about sensitive records being improperly accessed or stolen. And if nothing is done, more of people’s digital information and communication will be vulnerable to attack in the years to come. Fortunately, end-to-end encryption protects us from these vulnerabilities.

I know a few colleagues, lawyers, whose communications with their clients have been intercepted and compromised. They have had to seek out other solutions to protect their privileged conversations (one option has been the Signal app which was also developed by Open Whisper Systems). This development means they can simply stick with WhatsApp and be confident that their privileged conversations remain protected.

WhatsApp becoming fully encrypted is a big deal. It is also a smart move because it means that WhatsApp is simply unable to follow regulators’ directives to hand over users’ data. It places them beyond the fray and leaves governments to figure out how to deal with a substantial proportion of the planet’s population whose communications are protected from their interference. Or, as WhatsApp’s Koum and Acton put it:

Today more than a billion people are using WhatsApp to stay in touch with their friends and family all over the world. And now, every single one of those people can talk freely and securely on WhatsApp.

Image credit: Pixabay