Will You Ever Use Your ATM Again? Presented by: Bob Clary Carolyn McLellan Jane Mosher Karen Weil-Yates

Top 10 Quick Facts  1 new ATM installed every 5 minutes  ATM fraud in US approximately $50M/ year  1.2M ATMs installed worldwide  ATM is equal in importance to cell phones &  Total cost of fraud is 4x actual amount of $$ taken  281,000 customers affected  Fraud growth rate is up to 35%/year  Soft target/low risk to criminals  Impossible to ID criminals (often not prosecuted)  New gang-oriented activity

Information on Cryptology Failures  Not published or advertised Compare to airline crashes  Team of investigators  Accountability  Fix the problem  How can you fix the problem if you don’t know there was a problem?  If you can’t investigate the steps that led to a security breach, how can you analyze?

Investigation of ATM Security  Banking industry largest business after government  How can you prove you DID not withdraw funds from your bank?  PIN security assumptions Magnetic stripe on bank card contains account number PIN is derived by encrypting the account number and using only 4 digits

Weakness of ATM  Magnetic stripe Easily captured Card skimming

How PINS Were Derived  Used DES to calculate a natural PIN. Offset added  No real cryptographic function  Lets customers choose their own PINs DES key can be compromised in 22 hrs  Many banks now using triple-DES Equipment and software compatibility with DES Estimated time of compromise is 200 trillion years if no paper trail  Example: Account number: PIN key: FEFEFEFEFEFEFEFE Result of DES: A2CE126C69AEC82D Result in decimal form: Natural PIN: 0224 Offset: 6565 Customer PIN: 6789 Back

DES  56-bit key  Considered secure until Jan hours to break DES cracker available on line for $200,000  ATMs vulnerable

Security Breaches  Inside Most threats  Outside

Inside Security Breaches  Bank clerk issues two cards—one for customer, one for self Bank had a policy that ATM withdrawals with receipts did not show up on customer statement.  ATM has computer attached that captures PINs and account numbers  Tellers issued ATM cards that can debit any customer account For use when tellers ran out of cash  Loss of dual control security measures to cut down on costs

Outside Security Breaches  Unscrupulous persons stand in ATM line, observe customers entering PINs Pick up discarded ATM tickets, which used to have the entire account number  Copied account numbers to blank cards Changed in 1992 to display only few numbers of account.  Jackpotting Record a `pay‘ response (which is not authenticated or encrypted) from the bank to the machine Replay it until the machine is empty.

Outside Security Breaches  Poor programming Telephone card inserted Program assumed it was previous ATM card  Sending cards and PINs through postal service Think college students

Outside Security Breaches  Testing programs not deleted  Vending machines that take ATMs Record PINS and account numbers sending data by modem to thieves  Can buy used ATMs Like a used computer with all the software included

PINs  Personal Identification Number  Used in conjunction with magnetic stripe

Why 4 Digit PINs?  With standard usage: 1 in 10,000 chance of discovering PIN Use with 3 tries, access denied and card confiscated  Now chance of discovery is 1 in 3,333  Ways security is decreased Offline ATMs and POS devices without full encryption Mathematical calculation of PINs  Credit card: Digit 1 + Digit 4 = Digit 2 + Digit 3  Debit card (same bank) Digit 1 + Digit 3 = Digit 2 + Digit 4  Can use mathematical formula to cut down on possible combinations: Ex: PIN 4455

Discovering PINs  Banks suggesting ways for persons to remember PINs (other than writing down)  Ex: 2256  Increased odds of discovery from 1 in 3,333 to 1 in rbjgflmjcp oleloaiaru acetuoricu ehdnmekydg

Discovering PINs  Programming Bank issued same PIN to everyone Only 3 variations of PINs used—then forged  Random PINs (not encrypted from account number) or customer-selected PINs Bank file holding PINs If same encrypted version of PIN used, programmer can search account database for users with same PIN Banks writing encrypted PIN to card stripe  Change account number on your own card to that of target and use with your own PIN

How ATM Encryption Should Work  Review DES Encryption Review DES Encryption  PIN key must be kept secret Terminal key at each ATM, carried to each branch by two separate officials Input at ATM keyboard Combined to form key  PIN Key encrypted under terminal key  Sent to ATM by bank’s central computer

ATM Encryption Between Banks  Foreign PINs encrypted at ATM Use of Working Key shared at own bank (current ATM)  Decrypted and immediately re-encrypted using another working key shared with the card issuing bank (customer’s ATM)  Working keys must be protected by ZONE key with other banks or network switch Sets up fresh working keys every day to each ATM, encrypting under ATM’s terminal key.

How Are All These Keys Kept Secure?  PC in a safe with security module Manages all bank’s keys and PINs Programmers only see encrypted PINs Requires special hardware devices  Expensive  Time-consuming to install security modules  Not provided for some equipment  No special security modules Control through software  Programmers now have more information They can find PIN key

Security Module Software Problems  Back-door for vendor maintenance  Terminal emulation software can be set to log all transactions Ex: Bank setting up zone keys with VISA  Working keys 20 bits instead of 56 bits  Once 1000 keys generated, probability increases that there will be duplicates

Security Module Software Problems  Lose the key to the secure room? Drill in  Are switches to secure computer secure?  Where is backup of security modules?  Where is controller for ATM dispenser? Needs to be next to dispenser so information is not sent over wire to branch office.

Poor Implementation of Security  Response codes for incoming transactions Are they monitored, logged, analyzed?  Subcontracting ATMs and giving contractor PIN key  PIN keys shared between banks  Poor key management No dual control  Keys kept in files rather than locked up  No documented procedures for handling keys

Cryptanalysis  Some banks using old algorithms  Hacking into proprietary system to determine algorithm  Weak algorithms RSA with key sizes between 100 and 400 bits (need minimum of 500 bits)  Brute force, especially of zone keys

Triple DES  Current implementation  Two 56-bit keys  Encrypt-decrypt-encrypt model KL (Key Left) DES encryption KR (Key Right) DES decryption KL encrypts again  Estimated 200 trillion years to crack

Secure Key Management  All DES keys are safe if used only once & discarded  Keys are stored in two other states: Host’s memory or database Transmission over networks  Vulnerable when stored or transmitted outside the HSM (hardware or host security module)

 Triple DES keys are stored as two DES keys (KL and KR)  Side-by-side in a database  Access to HSM Independent DES keys can be “attacked” Shared among other systems attached to the host Secure Key Management

Solution (Everywhere But US)  EMV Standard EuroPay, MasterCard, Visa SmartCard (with a chip) January 2005

Bank Smart Cards  Transaction using a chip & terminal Reduces counterfeiting due to complexity & expense Can work with HSM

Future Enhancements of EMV/Smart Card  Biometric capacity Iris scanning Fingerprinting Voice recognition  Backwards compatible (magnetic stripes)

References R. Anderson, “Why Cryptosystems Fail,” (March 1998); available at Celent Communications, “Smart Cards in US Banking: Is the Chip Hip”? (October 18, 2001); available at “Combining Key Management with Triple-DES to Maximize Security,” (July 2002); available at “EMV Smart Card Issuing,” (2004); available at

References The Jolly Roger (alias), “Jackpotting ATM Machines,” The Anarchist’s Cookbook. (Retrieved May 17, 2005); available at Levelfour Americas, “Could Growing ATM Fraud Accelerate US Conversion to the Chip Card”? (November 2004); available at B. and D. Mikkelson, “Bank ATMs Converted to Steal IDs of Bank Customers,” (January 19, 2004); available at