Category Archives: Banking security

The security of the banking system, as well as hardware and software commonly used in such installations

Current issues in payments (part 2)

With some delay here is the second and final part on our impressions of David Birch’s Tomorrow’s Transactions Forum (TTF13), which we attended thanks to Dave’s generosity (See full agenda and PowerPoint presentations here). See part 1 here.

NOTE: Although written in first person, what follows results from a combination of Laurent Simon’s and my notes.

The theme of day 2 at TTF13 was social inclusion. The kick off question was “How to develop tools to help people deal with money?” (people with no financial culture and based on a transactional account).

This was followed by presentations on “Comic Relief” (the day before ‘the big day’), “Universal Credit” and expert panel on financial inclusion.
Continue reading Current issues in payments (part 2)

Current issues in payments (part 1)

In this first of a two or three part instalment. In them Laurent Simon and I comment on our impressions of David Birch’s Tomorrow’s Transactions Forum, which we attended thanks to Dave’s generosity.

NOTE: Although written in first person, what follows results from a combination of Laurent’s and my notes.

This was a two day event for a handful of guests to foster communication and networking. I appreciated the format.

After a brief introduction, the first day kicked off with my ever growing presentation on the origins of the cashless society (you can see it here ).

The following act was Tillman Bruett (UNCDF), who was involved in the drafting of The journey towards cash-lite (at least so say the acknowledgements).
Continue reading Current issues in payments (part 1)

UK bank fraud up by 11% in 2012, but how much do customers lose?

Today, the UK Cards Association (UKCA) published their summary of bank fraud for 2012. This provides an important insight into banking fraud, and the level of detail which the UK banks provide is very welcome. The UKCA figures go back to 2007, but I’ve collected the figures from previous releases going back to 2004. This data reveals some interesting trends, especially related to the deployment of new security technologies.

UK Cards Association fraud statistics 2012
larger version (PDF)

The overall fraud losses in 2012 are £475.3m, up 11% from the 2011 level, but for the purposes of comparison it is helpful to exclude the losses from phone banking since these figures were only available since 2009 (and are only 2.7% of the total). If we look at the resulting trend in total fraud  (£462.7m) we can see that while there was an increase in 2012, that is from a starting position of a 10-year low in 2011 so isn’t a reason to panic. We are still far from the peak in 2008 of £704.3m.

[You may have noticed the miniaturised graph in line with the text above, which an an example of a sparkline and I’ll be using these throughout this post to more clearly show trends in the data. Each graph shows the change in a single value over the 2004–2012 period, and is followed by the figure for 2012 in red.]

However, there is a large omission in the UKCA data – it records losses of the banks and merchants but not customers. If a customer is a victim of fraud, but the bank refuses to refund them (because the bank claims the customer was negligent), we won’t see it in these figures – as confirmed by a UKCA representative in an interview on BBC Radio Merseyside on 2007-02-19. We don’t know how much is missing from the fraud statistics as a result, but from the Financial Services Authority statistics we can see that there were 483,666 complaints in the first half of 2012 against firms regarding disputed charges, so the sums in question could be substantial. But despite this limitation, the statistics from the UKCA are valuable, especially in that it gives a break down of fraud by type.

Continue reading UK bank fraud up by 11% in 2012, but how much do customers lose?

How Certification Systems Fail: Lessons from the Ware Report

Research in the Security Group has uncovered various flaws in systems, despite them being certified as secure. Sometimes the certification criteria have been inadequate and sometimes the certification process has been subverted. Not only do these failures affect the owners of the system but when evidence of certification comes up in court, the impact can be much wider.

There’s a variety of approaches to certification, ranging from extremely generic (such as Common Criteria) to highly specific (such as EMV), but all are (at least partially) descendants of a report by Willis H. Ware – “Security Controls for Computer Systems”. There’s much that can be learned from this report, particularly the rationale for why certification systems are set up as the way they are. The differences between how Ware envisaged certification and how certification is now performed is also informative, whether these differences are for good or for ill.

Along with Mike Bond and Ross Anderson, I have written an article for the “Lost Treasures” edition of IEEE Security & Privacy where we discuss what can be learned, about how today’s certifications work and should work, from the Ware report. In particular, we explore how the failure to follow the recommendations in the Ware report can explain why flaws in certified banking systems were not detected earlier. Our article, “How Certification Systems Fail: Lessons from the Ware Report” is available open-access in the version submitted to the IEEE. The edited version, as appearing in the print edition (IEEE Security & Privacy, volume 10, issue 6, pages 40–44, Nov‐Dec 2012. DOI:10.1109/MSP.2012.89) is only available to IEEE subscribers.

Yet more banking industry censorship

Yesterday, banking security vendor Thales sent this DMCA takedown request to John Young who runs the excellent Cryptome archive. Thales want him to remove an equipment manual that has been online since 2003 and which was valuable raw material in research we did on API security.

Banks use hardware security modules (HSMs) to manage the cryptographic keys and PINs used to authenticate bank card transactions. These used to be thought to be secure. But their application programming interfaces (APIs) had become unmanageably complex, and in the early 2000s Mike Bond, Jolyon Clulow and I found that by sending sequences of commands to the machine that its designers hadn’t anticipated, it was often possible to break the device spectacularly. This became a thriving field of security research.

But while API security has been a goldmine for security researchers, it’s been an embarrassment for the industry, in which Thales is one of two dominant players. Hence the attempt to close down our mine. As you’d expect, the smaller firms in the industry, such as Utimaco, would prefer HSM APIs to be open (indeed, Utimaco sent two senior people to a Dagstuhl workshop on APIs that we held a couple of months ago). Even more ironically, Thales’s HSM business used to be the Cambridge startup nCipher, which helped our research by giving us samples of their competitors’ products to break.

If this case ever comes to court, the judge might perhaps consider the Lexmark case. Lexmark sued Static Control Components (SCC) for DMCA infringement in order to curtail competition. The court found this abusive and threw out the case. I am not a lawyer, and John Young must clearly take advice. However this particular case of internet censorship serves no public interest (as with previous attempts by the banking industry to censor security research).

Virgin Money sends email helping phishers

It’s not unusual for banks to send emails which are confusingly similar to phishing, but this recent one I received from Virgin Money is exceptionally bad. It tells customers that the bank (Northern Rock) is changing domain names from their usual one ( to and customers should use their usual security credentials to log into the new domain name. Mail clients will often be helpful and change the into a link.

This message is exactly what phishers would like customers to fall for. While this email was legitimate (albeit very unwise), a criminal could follow up with an email saying that savings customers should access their account at (which is currently available for registration). Virgin Money have trained their customers to accept such emails as legitimate, which is a very dangerous lesson to teach.

It would have been safer to not do the rebranding, but if that’s considered essential for commercial reasons, then customers should have been told to continue accessing the site at their usual domain name, and redirected them (via HTTPS) to the new site. It would mean keeping hold of the Northern Rock domain names for the foreseeable future, but that is almost certainly what Virgin Money are planning anyway.

[larger version]

GetCash from NatWest

It has been four or five months since NatWest launched a new function in its mobile phone app – GetCash. The goal was to allow customers to withdraw cash from NatWest’s ATMs without a debit or credit card. The app receives a six digit code that customers can type into an ATM and get as much as £100 at a time. I am not sure how useful it is as I personally forget my mobile phone more often than my wallet but it appears that some crooks found it very useful indeed.

A news about the service being suspended broke out on 6th of October and it has been covered in BBC Breakfast today. I have several thoughts related to this incident. Continue reading GetCash from NatWest

Chip and Skim: cloning EMV cards with the pre-play attack

November last, on the Eurostar back from Paris, something struck me as I looked at the logs of ATM withdrawals disputed by Alex Gambin, a customer of HSBC in Malta. Comparing four grainy log pages on a tiny phone screen, I had to scroll away from the transaction data to see the page numbers, so I couldn’t take in the big picture in one go. I differentiated pages instead using the EMV Unpredictable Number field – a 32 bit field that’s supposed to be unique to each transaction. I soon got muddled up… it turned out that the unpredictable numbers… well… weren’t. Each shared 17 bits in common and the remaining 15 looked at first glance like a counter. The numbers are tabulated as follows:


And with that the ball started rolling on an exciting direction of research that’s kept us busy the last nine months. You see, an EMV payment card authenticates itself with a MAC of transaction data, for which the freshly generated component is the unpredictable number (UN). If you can predict it, you can record everything you need from momentary access to a chip card to play it back and impersonate the card at a future date and location. You can as good as clone the chip. It’s called a “pre-play” attack. Just like most vulnerabilities we find these days some in industry already knew about it but covered it up; we have indications the crooks know about this too, and we believe it explains a good portion of the unsolved phantom withdrawal cases reported to us for which we had until recently no explanation.

Mike Bond, Omar Choudary, Steven J. Murdoch, Sergei Skorobogatov, and Ross Anderson wrote a paper on the research, and Steven is presenting our work as keynote speaker at Cryptographic Hardware and Embedded System (CHES) 2012, in Leuven, Belgium. We discovered that the significance of these numbers went far beyond this one case.

Continue reading Chip and Skim: cloning EMV cards with the pre-play attack

European ATM Conference & the Cashless Society

I was a guest the annual meeting of the European branch of ATM Industry Association. This was a two day event in London (May 22–23, 2012). I was there thanks to Tom Harper, founder of ATM Marketplace, that is, a B2B website for ancillary cash machine equipment (established circa 1997). Although my interest was to meet Tom to finalise an outline for a forthcoming history of the ATM, the almost ethnographic experience of attending a practitioner conference was refreshing. What follows are some of my impressions of the first day (as I had an overseas engagement the rest of the week).

The conference was jointly organised by ATMIA and Dominic Hirsh’s Retail Banking Research. I have used some of RBR’s data in the past and it is indeed one of the most authoritative sources of information on cash machines, cards and payments. During one of the presentations it was shown how estimates of ATM deployed in Sweden were more accurate than those the Riksbank.

Of greater interest for this blog, is that RBR also organises an annual conference on security. That was a bit disappointing since I was looking to hear on it. Other topics off the agenda included SEPA, regulation enabling independent ATM deployers (IAD) and pressures to reduce interchange fees. I was told they had been addressed in the recent past. In this sense and surprising for a meeting of some 70+ presenters and 500 attendees, the conference was much more ‘on theme’ than an academic gathering of similar size.

So what were the themes? The main theme was self service kiosks, while sub-themes included the cashless society and EMV (interoperation standard for Europay, Visa and Mastercard chip cards).

Continue reading European ATM Conference & the Cashless Society

I'm from the Government and I'm here to help

Two years ago, Hyoungshick Kim, Jun Ho Huh and I wrote a paper On the Security of Internet banking in South Korea in which we discussed an IT security policy that had gone horribly wrong. The Government of Korea had tried in 1998 to secure electronic commerce by getting all the banks to use an officially-approved AciveX plugin, effectively locking most Koreans into IE. We argued in 2010 that this provided less security than it seemed, and imposed high usability and compatibility costs. Hyoungshick presented our paper at a special conference, and the government withdrew the ActiveX mandate.

It’s now apparent that the problem is still there. The bureaucracy created a procedure to approve alternative technologies, and (surprise) still hasn’t approved any. Korean web businesses remain trapped in the bubble, and fall farther and farther behind. This may well come to be seen as a warning to other governments to adopt true open standards, if they want to avoid a similar fate. The Cabinet Office should take note – and don’t forget to respond to their consultation!