FY2019 Budget Sees Cyber Funding Boost, Research Cuts. President Trump’s recently revealed budget for fiscal year 2019 increases #cybersecurity funding across the government, but also includes significant cuts in funding for #cyber #research.

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Trump’s 2019 Budget Boosts Cyber Spending but Cuts Research

Nextgov | By Joseph Marks

President Donald Trump’s 2019 fiscal year budget request boosts cybersecurity funding by about 4 percent across the government, including significant hikes at the Homeland Security Department and Pentagon.

The overall increase includes even larger cyber funding spikes at key agencies, including a 23 percent jump at the Energy Department, a 33 percent jump at the Nuclear Regulatory Commission and a 16 percent hike at the Veterans Affairs Department. The budget, however, includes a massive cut of 18 percent to the government’s main cyber standards organization, the National Institute of Standards and Technology. That cut comes as NIST is working on an update to its cybersecurity framework, which is now mandatory for all federal agencies.

The budget also marks a major shift for cyber research and development funding inside the Homeland Security Department. Cyber research was formerly housed primarily in the department’s Science and Technology Directorate. Going forward, that funding, which totals $41 million in the president’s budget request, will be inside the cyber and infrastructure protection division—called the National Protection and Programs Directorate, or NPPD. The move is another blow for the Science and Technology Directorate, which has faced significant budget cuts since the start of the Trump administration.

The shift was made so “operators on the ground have influence over research and development,” a senior administration official said during a press call. The cyber and infrastructure protection division will work closely with the science and technology division on research priorities, the official said.The budget also calls for a small spike in government-wide information technology spending.

The president’s budget request is as much an ideological document as a budgeting one. The request lays out the executive branches’ funding priorities, but those numbers are only a rough starting point when Congress begins its own budgeting process and they’re often ignored entirely. Funding Hikes at Homeland Security and Defense, Homeland Security cyber spending overall will stay roughly flat at about $1.72 billion.

The cyber division of the department’s cyber and infrastructure protection wing, however, will get a 7 percent spike from $665 million in the 2018 fiscal year to $712 million this year.

In addition to protecting federal civilian government computer networks, that division is also helping states secure their election systems against cyberattacks.

The budget includes $238 million for Homeland Security’s continuous diagnostics and mitigation program, which delivers a suite of cybersecurity tools to federal agencies and will eventually track federal computer systems on a government-wide dashboard. That’s down from $279 million in last year’s request.

The budget commits $407 million for a government-wide intrusion detection program called Einstein. That’s up from $397 million in last year’s request.

At the Pentagon, total cyber funding jumps to $8.5 billion in this year’s request, a 4.2 percent hike over the prior year.

That jump comes as U.S. Cyber Command, which was elevated last year to a unified combatant command, is in the process of reaching full operational capability.

The budget released Monday also:

  • Includes $8 million for the White House Office of Management and Budget’s cybersecurity oversight responsibilities, down from $19 million last year.
  • Includes $25 million for a cybersecurity enhancements account at the Treasury Department, which will help upgrade high-value Treasury computer systems that rely on outdated technology. The fund will also help the department respond more nimbly to cyber incidents. Overall cyber funding at Treasury will drop from about $529 million last year to $500 this year.
  • Raises funding for the Justice Department’s national security division, which prosecutes cyber crimes, from $95 million to $101 million. Overall Justice Department cyber funding is at $721 million, up from $704 million last year but down from $735 during the final year of the Obama administration.
  • Includes $10 million for cyber upgrades at the Transportation Department.
  • Hikes Veterans Affairs Department cyber funding 16 percent from $360 million last year to $418 million this year.
  • Raises cyber funding at the Office of Personnel Management 18 percent, from about $39 million to about $46 million.
  • Hikes Nuclear Regulatory Commission cyber funding 33 percent, from about $24 million to about $32 million.

Hikes Energy Department cyber funding 23 percent, from about $379 million to about $465 million.

Cryptocurrency Malware Hits #UK, #US, Australian #Government Websites. A security researcher uncovered over 4,000 websites compromised by malware that mines for crypto currency. Websites affected include several government websites in the UK, US, and Australia.

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UK Government Websites, ICO Hijacked by Cryptocurrency Mining Malware

ZDNet | By Charlie Osborne

A number of government websites in the UK, US, and Australia, including the UK Information Commissioner’s Office (ICO), have been compromised by cryptojacking malware. According to security researcher Scott Helme, over 4,000 websites have been affected. The security consultant was made aware of the scheme after another security expert, Ian Thornton-Trump, pointed out that the ICO’s website had a cryptominer installed within the domain’s coding.

Helme confirmed the findings on Twitter, and upon further exploration, discovered that the mining code was present on all of the ICO’s web pages. It was not long before the researcher realized far more than the ICO had been compromised. Websites including the UK’s Student Loans Company (SLC), the UK National Health Service (NHS) Scotland, the Australian Queensland government portal, and US websites were also affected, such as uscourts.gov.

Cryptocurrency mining software is not illegal and some websites have begun tinkering with plugins that borrow visitor CPU power to mine virtual currency, potentially as an alternative for advertising. However, malware which installs such mining software without consent is fraudulent and can slow down visitor systems when legitimate websites are serving up mining scripts. The researcher traced the code found in the ICO website to a third-party plugin, Browsealoud, which is intended to assist visually impaired visitors to website domains. The plugin’s developers, Texthelp, confirmed that the plugin had been compromised to mine cryptocurrency.

In a blog post, the researcher said that the script for the Browsealoud plugin, ba.js, was altered to include the Coinhive cryptocurrency miner, which specializes in Monero.Any website using the plugin and loading the file would then unwittingly load the cryptocurrency miner with it. As a result, it is not the websites themselves that have been internally compromised, but rather a third-party service that was tampered with for the purpose of cryptojacking.

“If you want to load a crypto miner on 1,000+ websites you don’t attack 1,000+ websites, you attack the one website that they all load content from,” Helme noted. “In this case, it turned out that Texthelp, an assistive technology provider, had been compromised and one of their hosted script files changed.”

A public search on PublicWWW revealed that up to 4,275 websites may have loaded the infected script and mined cryptocurrency by borrowing visitor processing power as a result.

At the time of writing, the Browsealoud website is not accessible.

Texthelp said no customer information has been exposed due to the security lapse, and “Browsealoud [was removed] from all our customer sites immediately, addressing the security risk without our customers having to take any action.”

The exploit was active for roughly four hours on Sunday.

Texthelp intends to keep the plugin offline until 12.00pm GMT on Tuesday to “allow time for Texthelp customers to learn about the issue and the company’s response plan.”

Helme says that this attack vector is nothing new, but it would have taken a simple tweak to the loading script to prevent it happening in the first place. By altering the standard coding to load a .js file to include the SRI Integrity Attribute, which allows a browser to determine whether or not a file had been modified, the entire campaign could have been “completely neutralized.”

“In short, this could have been totally avoided by all of those involved even though the file was modified by hackers,” the researcher says. “I guess, all in all, we really shouldn’t be seeing events like this happen on this scale to such prominent sites.”

At the time of writing, the ICO website is not available.

On Sunday, the UK National Cyber Security Center (NCSC), part of the GCHQ intelligence agency, said that there is “nothing to suggest that members of the public are at risk.”

“NCSC technical experts are examining data involving incidents of malware being used to illegally mine cryptocurrency,” an NCSC spokesperson said. “The affected service has been taken offline, largely mitigating the issue. Government websites continue to operate securely.”

Dark Caracal Targets Thousands in Over 21 Countries. The Electronic Frontier Foundation and Lookout Security released a report detailing several active Dark Caracal #hacking campaigns that successfully targeted mobile devices of #military personnel, medical #professionals, #journalists, #activists, and others in over 21 countries.

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Dark Caracal: Hackers Spied on Targets in Over 21 Countries and Stole Hundreds of Gigabytes of Data

International Business Times UK | By India Ashok

A new and massive cyberespionage campaign, believed to be the work of Lebanese hackers linked to Lebanese General Security Directorate (GDGS) in Beirut, has been uncovered.

A new report by the Electronic Frontier Foundation and Lookout Security revealed that the cyberespionage group, dubbed Dark Caracal, has conducted numerous attacks against thousands of targets in over 21 countries in North America, Europe, the Middle East, and Asia.

The hacker group successfully targeted mobile devices of military personnel, medical professionals, journalists, lawyers, activists and more. It has stolen hundreds of gigabytes of data, including photos, text messages, call records, audio recordings, contact information and more.

The cyberespionage group stole this massive trove of information using its custom-developed mobile spyware called Pallas. The spyware, which Lookout discovered in 2017, is found in malware-laced Android apps — knock-offs of popular apps like WhatsApp, Telegram and others that users downloaded from third-party online stores.

“People in the US, Canada, Germany, Lebanon, and France have been hit by Dark Caracal,” EFF director of Cybersecurity Eva Galperin said in a statement. “This is a very large, global campaign, focused on mobile devices. Mobile is the future of spying, because phones are full of so much data about a person’s day-to-day life.”

According to the report, Dark Caracal has been active in several different campaigns, running parallel, with its backend infrastructure also having been used by other threat actors. For instance, Operation Manul, which according to the EFF targeted journalists, lawyers and dissidents of the Kazakhistan government, was launched using Dark Caracal’s infrastructure.

According to Galperin, the Dark Caracal group may be offering its spyware services to various clients, including governments, The Register reported.

Dark Caracal hackers also make use of other malware variants such as the Windows malware called Bandook RAT. The group also uses a previously unknown multi-platform malware dubbed CrossRAT by Lookout and EFF, which is capable of targeting Windows, Linux and OSX systems. The report states that the APT group also borrows or purchases hacking tools from other hackers on the dark web.

“Dark Caracal is part of a trend we’ve seen mounting over the past year whereby traditional APT actors are moving toward using mobile as a primary target platform,” said Mike Murray, VP of security intelligence at Lookout. “The Android threat we identified, as used by Dark Caracal, is one of the first globally active mobile APTs we have spoken publicly about.”

“One of the interesting things about this ongoing attack is that it doesn’t require a sophisticated or expensive exploit. Instead, all Dark Caracal needed was application permissions that users themselves granted when they downloaded the apps, not realizing that they contained malware,” said EFF staff technologist Cooper Quintin. “This research shows it’s not difficult to create a strategy allowing people and governments to spy on targets around the world.”

Ransomware Posing as Flash Player Download A new strain of ransomware hit organizations throughout Eastern Europe earlier this week. Spread through compromised websites, the Bad Rabbit ransomware poses as an Adobe Flash Player download, and after infecting one machine, can quickly spread through an organization’s network without being detected.

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The Latest Ransomware Presents Itself as an Adobe Flash Player Download

Nextgov | By Keith Collins |

A new strain of ransom ware, called Bad Rabbit, began hitting organizations throughout Russia and Eastern Europe on Wednesday (Oct. 25). The malware is being spread through compromised websites, presenting itself as an Adobe Flash Player download.

“When users visited one of the compromised websites, they were redirected to 1dnscontrol[.]com, the site which was hosting the malicious file,” according to a blog post by Talos, Cisco’s threat intelligence team.

Once infected with the ransom ware, victims are directed to a web page on the dark web, which demands they pay 0.05 bit coin (roughly $285 USD) to get their files back.

After one computer on a network is infected, Bad Rabbit can quickly and covertly spread through an organization without being detected. Although the ransom ware has been detected in several countries, it appears to be concentrated in organizations in Russia and Ukraine, particularly media outlets.

U.S. Takes Down International #ID #Theft Ring the U.S. Justice Department indicted 36 people in connection with an international identity theft ring known as #Infraud. #cyberfraud

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International Cyber Crime Ring Smashed After More Than $530 Million Stolen

CNN | By Ben Westcott

US authorities have indicted 36 people for stealing more than $530 million from victims across the world in one of the “largest cyber fraud enterprises ever prosecuted.” In a statement, US investigators claimed the accused were taking part in a massive operation known as the Infraud Organization, which stole and then sold other people’s personal information, including credit card and banking information. “Today’s indictment and arrests mark one of the largest cyberfraud enterprise prosecutions ever undertaken by the US Department of Justice,” Acting Assistant US Attorney General John Cronan said in a statement. Cronan said it was believed the group had intended to cause losses totaling more than $2.2 billion during their seven years of operation. Authorities have already arrested 13 people from a range of countries including the United States, Australia, the United Kingdom, France and Italy. The Infraud Organization has been in operation since October 2010, according to the statement from the US Justice Department, when it was launched by a 34-year-old Ukrainian man Svyatoslav Bondarenko. He had wanted to grow the organization into the internet’s largest “carding” group — that is, a criminal group who buy retail purchases with counterfeit or stolen credit card information. Their motto was, “In Fraud We Trust.” According to the Justice Department statement, there were 10,901 registered members of the Infraud Organization as of March 2017, who were divided into specific roles. They ranged from the “administrators” who oversaw the organization’s strategic planning and approved membership, all the way down to the “members” who used the Infraud forum to facilitate their criminal activities. Law enforcement agencies from across the world collaborated on the investigation into Infraud, including Italy, Australia, the United Kingdom, France and Luxembourg, among many others.

Army to Modernize Tracking System for Cyber Attacks

US Army Cyber CommandThe U.S. Army is preparing to modernize Blue Force Tracking, its friendly forces tracking system, to ensure continued operability in the event of cyber and electronic warfare attacks.

The Army Wants to be Able to Track Friendly Forces During a Cyber Attack
C4ISRNET | By Daniel Cebul

Washington — The U.S. Army is preparing to modernize its friendly forces tracking system so that it will continue to operate through cyber and electronic warfare attacks.

The service’s situational awareness network, known as Blue Force Tracking, already receives periodic updates, but a more significant upgrade is needed if troops are to be adequately equipped for future warfare. “This capability improvement is necessary as the United States faces increased cyber and electronic warfare threats from near-peer adversaries,” Lt. Col. Shane Sims said in an Army press release.

Defense News reported in November 2017 that Russia’s Zapad exercise took place in a largely EW-hostile environment. Because Russia proved it can jam its own forces relatively easily, military officials are concerned about how well NATO forces are prepared to operate in GPS- and communication-denied environments.

To address these issues, the program office partnered with the Army’s Communications Electronic-Research, Development and Engineering Center, or CERDEC, and ran concurrent studies that examined the capabilities and limitations of current blue force tracking technology.

The work included:

A traffic study that explored how the current blue force tracking system generates and receives data, as well as the requirements of moving data digitally to identify any network vulnerabilities.

A cyber and electronic warfare study that aimed to identify what emerging technologies need to be developed to stay ahead of adversaries. The Army announcement notes, “assured positioning, navigation and timing, known as PNT, for soldiers in GPS-denied environments was the primary goal in this study.”

A network study that examined how to communicate future data more efficiently within the network.

A transport study that identified the physical infrastructure — radios, satellites and antennas — needed to move larger quantities of information. Part of the solution is to build in redundancies into the network to use different radios and different frequency bands.

This might entail deploying satellites of higher technological quality in larger quantities. A new satellite infrastructure that could handle more data and transmit information faster was credited with the improvements soldiers observed the last time the BFT system was upgraded in 2011.

“The goal of the next-generation BFTs is to reduce the cognitive burden on soldiers by creating a simply and intuitive network,” Sims said.

The Army issued a request for information on the system this month, and CERDEC is set to meet with Army leaders to discuss an acquisition strategy in February.

The Army hopes to issue a request for proposals from industry in early 2020, and could begin fielding the new BFT by 2025, the release said.

The Risk of Insider Threat

Research demonstrates that most fraud risk is attributed to insider threat. In a study almost one third of all cyber attacks were committed by ex-employees.

It’s Not Just Cybercriminals: Insider Threats Still a Top Cyber Risk for Corporations
Property Casualty 360° | By Rhys Dipshan

As cyber espionage and ransom ware attacks wreak increasing damage on the world economy, it makes sense that many companies think their biggest threats comes from external actors.
But most risk still emanates from inside the organization, according to the Kroll’s Global Fraud & Risk Report.
The report was based on a survey conducted among 540 senior executives across six continents and found that a significant amount of companies’ fraud, cybersecurity and security incidents were caused by current or former employees.
Risks from current & former employees
Ex-employees, for example, were key perpetrators in 37% of security incidents that happened outside the cyber realm. What’s more, 25% of security incidents were caused by middle- or senior-level employees, while 26% were by junior employees.
Junior employees were also the most likely to cause fraud incidents, followed by ex-employees.
And while most cybersecurity incidents were caused by random cyberattackers, at 34%, ex-employees still accounted for 28% of all attacks, while senior or middle management employees accounted for 19%, and junior employees 16%.
Alan Brill, senior managing director with Kroll’s cyber security and investigations practice, noted that oftentimes, organizations will concentrate too much on high-tech cybersecurity needs, such as protecting their networks, and miss the fact that their biggest “risk factor comes from those who have access to sensitive information.”
Ensure former employees don’t have access
One major shortcoming among organizations is not properly ensuring former employees do not have access to enterprise systems. “You need to be able to not just plan the steps the company is going to take [when an employee leaves], but you have to have a way of knowing that the steps are actually being done. I think in many cases, there is a disconnect from what managers believe is being done and what is happening on the ground,” Brill said.
Brill also advised organizations to ensure that “the right agreements are [in] place” to limit employees’ and contractors’ access to sensitive information, and train employees on the appropriate data handling procedures.
Most companies surveyed took measures to mitigate the risk of insider threats. Over 80%t restricted employees from installing software on company devices and had employee training programs. Over 75% had internal cybersecurity policies and procedures.
But Brill noted that it’s not enough to just have security programs and policies without constantly reviewing their usefulness. He said that many companies need to use “metrics to understand if what they’re doing is effective,” and build their security programs around tested results.
Fraud, information theft
Such proven programs are becoming increasingly necessary given the wide range of fraud and cybersecurity incidents that organizations face in the current economy. The survey found, for example, that 29% of respondent companies suffered fraud, which resulted in information theft, loss or attack, while 27% had theft of physical assets or stock, and 26% uncovered a conflict of interest.
Information theft and conflict of interest incidents were experienced by 5% more companies in 2017 than in 2016, the biggest increase among all types of fraud incidents.
Brill noted that such conflict of interest incidents are becoming more common as enterprises rely on more vendors in their supply chain and as compliance offices become “more able to detect conflicts of interest” through the use of better compliance technology.
More vulnerable to all types of threats in 2018
With regards to cyber incidents, the survey found the amount of companies attacked by malicious viruses rose 3% to 36% in 2017, while those suffering email phishing attacks rose 7% to 33%, which Brill attributed to such scams becoming more sophisticated.
When compared with the 2015 survey results, respondents believed they’re more vulnerable to all types of threats in 2017 than they were two years prior, with the exception of theft of physical assets or stock. Areas where respondents believe their vulnerability had increased the most since 2015 included IP theft, management of conflicts of interest, and market collusion.

DHS: More Fed Cyber Services Could Be Outsourced

Barry West, the Department of Homeland Security’s senior accountable official for risk management, believes that federal agencies may pursue outsourced cyber security services from contractors more frequently, due to the ongoing global shortage of and competition for cyber talent.

Government Could Shift to Security-as-a-Service, DHS’s West Says
Fedscoop | By Carten Cordell

With cyber talent in high demand, Barry West said Thursday that the government may soon to lean more heavily on the private sector for cyber security help.

West, the Department of Homeland Security’s senior accountable official for risk management, said that an ongoing global shortage of cyber talent could soon push agencies to more frequently pursue outsourced cyber security services from contractors rather than try to compete with the private sector.

“When I look at a visionary view of cyber, I think this is really where we are headed,” he said at ATARC’s Federal CISO Summit. “This would have been far-fetched probably five years ago, saying you were going to have a private sector company perform your security.”

West pointed to research from Gartner that predicted that there would be a global cyber shortfall of 1.8 million by 2022 — with the federal government struggling to compete with the private sector for talent, it may be more beneficial for agencies to contract for it, he said.

“This isn’t to say that there’s not going to be government oversight; there’s still not going to be a [chief information security officer] in charge,” he said, “but I really think we are headed for a model where we are going to see security-as-a-service and you are going to see [security operations center, or SOCs] as a service.”

West added that DHS is already in talks to consolidate 12 to 13 “disparate SOCs” — which help monitor cyber security posture from across the agency’s networks — saying that it is a key priority for Secretary of Homeland Security Kirstjen Nielsen.

“She really wants to see that happen,” he said. “It really shows when you have a major incident — when we had the WannaCry incident last year, it became real clear some of the disorganization we had around reporting.”

Consolidation would precede SOC-as-a-service, West said, with DHS beginning to merge SOC operations in the National Capital Region.

“I think it’s the way we’re headed. I think you will hear more of the SOC consolidation at DHS next year. That’s going to be a big focus for us,” he said.

After that, West said, DHS would likely craft some prototypes to test the SOC-as-a-service model over the next three to four years.

“I think we have to start thinking about it now and planning, but I think it’s the way of the future,” he said.

Symantec, McAfee Let Russia Search Through Their Software

A Reuters investigation found that global technology providers Symantec and McAfee allowed Russian authorities to search for vulnerabilities in the source code of some of their products that are also used by the U.S. government. U.S. lawmakers and security experts believe the practice could potentially jeopardize the security of networks in at least a dozen federal agencies.

Tech Firms Let Russia Probe Software Widely Used by U.S. Government
Reuters | By Dustin Volz, Joel Schectman, Jack Stubbs

WASHINGTON/MOSCOW (Reuters) – Major global technology providers SAP (SAPG.DE), Symantec (SYMC.O) and McAfee have allowed Russian authorities to hunt for vulnerabilities in software deeply embedded across the U.S. government, a Reuters investigation has found.

The practice potentially jeopardizes the security of computer networks in at least a dozen federal agencies, U.S. lawmakers and security experts said. It involves more companies and a broader swath of the government than previously reported.

In order to sell in the Russian market, the tech companies let a Russian defense agency scour the inner workings, or source code, of some of their products. Russian authorities say the reviews are necessary to detect flaws that could be exploited by hackers.

But those same products protect some of the most sensitive areas of the U.S government, including the Pentagon, NASA, the State Department, the FBI and the intelligence community, against hacking by sophisticated cyber adversaries like Russia.

Reuters revealed in October that Hewlett Packard Enterprise (HPE.N) software known as ArcSight, used to help secure the Pentagon’s computers, had been reviewed by a Russian military contractor with close ties to Russia’s security services.

Now, a Reuters review of hundreds of U.S. federal procurement documents and Russian regulatory records shows that the potential risks to the U.S. government from Russian source code reviews are more widespread.

Beyond the Pentagon, ArcSight is used in at least seven other agencies, including the Office of the Director of National Intelligence and the State Department’s intelligence unit, the review showed. Additionally, products made by SAP, Symantec and McAfee and reviewed by Russian authorities are used in at least eight agencies. Some agencies use more than one of the four products.

McAfee, SAP, Symantec and Micro Focus (MCRO.L), the British firm that now owns ArcSight, all said that any source code reviews were conducted under the software maker’s supervision in secure facilities where the code could not be removed or altered. The process does not compromise product security, they said. Amid growing concerns over the process, Symantec and McAfee no longer allow such reviews and Micro Focus moved to sharply restrict them late last year.

The Pentagon said in a previously unreported letter to Democratic Senator Jeanne Shaheen that source code reviews by Russia and China “may aid such countries in discovering vulnerabilities in those products.”

Reuters has not found any instances where a source code review played a role in a cyber attack, and some security experts say hackers are more likely to find other ways to infiltrate network systems.

But the Pentagon is not alone in expressing concern. Private sector cyber experts, former U.S. security officials and some U.S. tech companies told Reuters that allowing Russia to review the source code may expose unknown vulnerabilities that could be used to undermine U.S. network defenses.

“Even letting people look at source code for a minute is incredibly dangerous,” said Steve Quane, executive vice president for network defense at Trend Micro, which sells TippingPoint security software to the U.S. military.

Worried about those risks to the U.S. government, Trend Micro has refused to allow the Russians to conduct a source code review of TippingPoint, Quane said.

Quane said top security researchers can quickly spot exploitable vulnerabilities just by examining source code.

“We know there are people who can do that, because we have people like that who work for us,” he said.

In contrast to Russia, the U.S. government seldom requests source code reviews when buying commercially available software products, U.S. trade attorneys and security experts say.

OPENING THE DOOR

Many of the Russian reviews have occurred since 2014, when U.S.-Russia relations plunged to new lows following Moscow’s annexation of Crimea. Western nations have accused Russia of sharply escalating its use of cyber attacks during that time, an allegation Moscow denies.

Some U.S. lawmakers worry source code reviews could be yet another entry point for Moscow to wage cyberattacks.

“I fear that access to our security infrastructure – whether it be overt or covert – by adversaries may have already opened the door to harmful security vulnerabilities,” Shaheen told Reuters.

In its Dec. 7 letter to Shaheen, the Pentagon said it was “exploring the feasibility” of requiring vendors to disclose when they have allowed foreign governments to access source code. Shaheen had questioned the Pentagon about the practice following the Reuters report on ArcSight, which also prompted Micro Focus to say it would restrict government source code reviews in the future. HPE said none of its current products have undergone Russian source code review.

Lamar Smith, the Republican chairman of the House Science, Space and Technology Committee, said legislation to better secure the federal cyber security supply chain was clearly needed.

Most U.S. government agencies declined to comment when asked whether they were aware technology installed within their networks had been inspected by Russian military contractors. Others said security was of paramount concern but that they could not comment on the use of specific software.

A Pentagon spokeswoman said it continually monitors the commercial technology it uses for security weaknesses.

NO PENCILS ALLOWED

Tech companies wanting to access Russia’s large market are often required to seek certification for their products from Russian agencies, including the FSB security service and Russia’s Federal Service for Technical and Export Control (FSTEC), a defense agency tasked with countering cyber espionage.

FSTEC declined to comment and the FSB did not respond to requests for comment. The Kremlin referred all questions to the FSB and FSTEC.

FSTEC often requires companies to permit a Russian government contractor to test the software’s source code.

SAP HANA, a database system, underwent a source code review in order to obtain certification in 2016, according to Russian regulatory records. The software stores and analyzes information for the State Department, Internal Revenue Service, NASA and the Army.

An SAP spokeswoman said any source code reviews were conducted in a secure, company-supervised facility where recording devices or even pencils “are strictly forbidden.”

“All governments and governmental organizations are treated the same with no exceptions,” the spokeswoman said.

While some companies have since stopped allowing Russia to review source code in their products, the same products often remain embedded in the U.S. government, which can take decades to upgrade technology.

Security concerns caused Symantec to halt all government source code reviews in 2016, the company’s chief executive told Reuters in October. But Symantec Endpoint Protection antivirus software, which was reviewed by Russia in 2012, remains in use by the Pentagon, the FBI, and the Social Security Administration, among other agencies, according to federal contracting records reviewed by Reuters.

In a statement, a Symantec spokeswoman said the newest version of Endpoint Protection, released in late 2016, never underwent a source code review and that the earlier version has received numerous updates since being tested by Russia. The California-based company said it had no reason to believe earlier reviews had compromised product security. Symantec continued to sell the older version through 2017 and will provide updates through 2019.

McAfee also announced last year that it would no longer allow government-mandated source code reviews.

The cyber firm’s Security Information and Event Management (SIEM) software was reviewed in 2015 by a Moscow-based government contractor, Echelon, on behalf of FSTEC, according to Russian regulatory documents. McAfee confirmed this.

The Treasury Department and Defense Security Service, a Pentagon agency tasked with guarding the military’s classified information, continue to rely on the product to protect their networks, contracting records show.

McAfee declined to comment, citing customer confidentiality agreements, but it has previously said the Russian reviews are conducted at company-owned premises in the United States.

‘YOU CAN‘T TRUST ANYONE’

On its website, Echelon describes itself as an official laboratory of the FSB, FSTEC, and Russia’s defense ministry. Alexey Markov, the president of Echelon, which also inspected the source code for ArcSight, said U.S. companies often initially expressed concerns about the certification process.

“Did they have any? Absolutely!!” Markov wrote in an email.

”The less the person making the decision understands about programming, the more paranoia they have. However, in the process of clarifying the details of performing the certification procedure, the dangers and risks are smoothed out.”

Markov said his team always informs tech companies before handing over any discovered vulnerabilities to Russian authorities, allowing the firms to fix the detected flaw. The source code reviews of products “significantly improves their safety,” he said.

Chris Inglis, the former deputy director of the National Security Agency, the United States’ premier electronic spy agency, disagrees.

“When you’re sitting at the table with card sharks, you can’t trust anyone,” he said. “I wouldn’t show anybody the code.”

Third Largest County in U.S. Almost Lost $888K in Phishing Attack

Back in September 2017, a cybercriminal exploited Hurricane Harvey repair and rebuild efforts in the Houston area to dupe Harris County, the third largest county in the U.S., into releasing $888,000. While the county managed to recoup the payment, they plan on hiring a cyber security firm to review their internal policies and security controls, as increasingly sophisticated attacks from all over continue to target local governments.

Phishing Attackers Almost Steal $888K from Harris County, Texas, Prompting Cyber security Review
Government Technology | By Mihir Zaveri

On Sept. 21, not three weeks after Houston was ravaged by Hurricane Harvey, the Harris County auditor’s office received an email from someone named Fiona Chambers who presented herself as an accountant with D&W Contractors, Inc.

The contractor was repairing a Harvey-damaged parking lot, cleaning up debris and building a road for the county, and wanted to be paid. Chambers asked if the county could deposit $888,000 into the contractor’s new bank account.

“If we can get the form and voided check back to you today would it be updated in time for our payment?” read a Sept. 25 email from Chambers.

On Oct. 12, Harris County sent the money out. The next day, the county quietly was scrambling to get it back, after being alerted that the account did not belong to D&W, that Chambers did not exist and that county employees had been duped by a fraudster.

The county recouped the payment, but the ongoing investigation into who tried to take the county’s money and nearly got away with it has ignited a debate over the financial security and cyber security of the third-largest county in America. That debate comes as experts point to a growing number of increasingly sophisticated attackers from around the world, homing in on untrained employees or system vulnerabilities.

The incident now has become wrapped into an FBI investigation into a group that has attempted to extort local governments around the world, law enforcement officials said.

Meanwhile, some officials are moving to revamp their practices as others say further scrutiny of county defenses is necessary.

“We live in a rapidly changing world of technology that you can’t just sit pat and expect that the bad guys aren’t going to come after you,” Harris County Judge Ed Emmett said. “I think we need to look at all of our systems to be sure that somebody can’t get in and steal taxpayer money.”

The investigation into the incident comes as the cyber security of local governments has received increased scrutiny after reports in 2016 of Russian-sponsored attempts to hack campaign finance databases and software used by poll workers.

Harris County information technology officials last year acknowledged a “spike” in attempts to hack servers from outside of America’s borders, but, citing concerns over emboldening the hackers, they declined to say how big of a surge in hacking attempts the county was experiencing, whether it was election-related or which systems had been targeted.

Alan Shark, executive director and CEO of the Washington, D.C.-based Public Technology Institute, which partners with the National Association of Counties, said the attempt to steal money from Harris County was not typical, but local governments increasingly are becoming targets for hackers or other cyber criminals.

Shark said statistics to illustrate the trends specific to governments are hard to find, though he said they “mirror” those of the private sector. One firm estimates that by 2021, cybercrime will cost the world $6 trillion each year, up from $3 trillion in 2015.

“This is not somebody sitting in a college dorm somewhere, dreaming this up,” Shark said. “In most cases these are very sophisticated, more often happening from another nation or another country.”

Shark said local governments are particularly vulnerable after disasters.

Harris County Precinct 1 Constable Alan Rosen said his office has “worked the case as far as you can go,” and said that no county employee had been implicated.

“We’re working with the FBI because there have been multiple attempts by this group throughout the United States and abroad to phish in county governments, city governments, things like that,” Rosen said. “We’re working very closely with them.”

He declined to provide more information about the group being investigated, referring questions to the FBI office in Los Angeles.

An FBI spokeswoman said Wednesday she could not confirm or deny the investigation.

Rosen said he had never investigated such an incident before.

“But that doesn’t mean it hasn’t happened,” he said. “I just have not heard of it.”

The county makes nearly 10,000 payments to vendors each month totaling about $141 million, about a third of those in the form of electronic transfers like that set up in September to send out the $888,000.

Harris County Auditor Michael Post said he had never seen an attempt like the one from the fraudulent D&W contractor.

“I’m calling it a near miss,” Post said. “It was (nearly) $900,000. Oh my God, that happened. We did not want this to ever happen.”

He said while he cannot say for sure that it has not happened in the past, it likely would have been caught when whoever was supposed to receive the money did not.

Post said in the days after the incident, he created a five-person team that would begin reviewing every outgoing payment and double-checking that recipients are, in fact, who they say they are by calling and asking for verifying information. That team includes one individual certified by the Association of Certified Fraud Examiners.

Earlier this month, the auditor’s office staff went through training on how to review for fraudulent requests for payment.

Some say the changes so far do not go far enough.

Orlando Sanchez, the Harris County treasurer, who writes the actual checks for the county, said he would like to see a more comprehensive analysis of the county’s vulnerabilities. He said he has to write checks that are directed by the county auditor’s office, and he would like to see an outside agency or another county department audit the county’s payments.

On Jan. 9, Sanchez sought to hire an outside forensic financial investigation firm Briggs and Veselka to “review the county’s payment processes and controls” but a vote on the proposal was postponed by Harris County Commissioners Court after the county attorney’s office said it objected to some technical terms of the proposed contract.

Commissioners Court is expected to consider at its Jan. 30 meeting a proposal to hire a firm to look over the county’s internal policies and cyber security controls when it comes to the payment process.

“We are a big operation,” Emmett said. “Harris County has got more people than 26 states. We’re well into the billions of dollars on an annual budget. I think the more eyes the better.”