WEBVTT 00:12.640 --> 00:14.700 I thank you. 00:15.400 --> 00:21.740 This will be a technical talk, but it's a technical talk being delivered at DefCon. 00:22.200 --> 00:24.720 So, you take your chances. 00:26.580 --> 00:28.520 Am I close enough? 00:30.460 --> 00:32.240 I don't know. 00:40.860 --> 00:42.860 I think it works. 00:43.340 --> 00:44.800 Does it work? 00:45.500 --> 00:47.100 Great, okay. 00:47.100 --> 00:54.280 What I said was, this will be a technical talk, but it is a technical talk at DefCon. 00:54.720 --> 00:58.420 So that makes it a little bit special. 00:59.500 --> 01:04.880 I'm going to talk about the ATM machines. 01:06.220 --> 01:07.880 That's where I get all my money. 01:07.880 --> 01:11.260 I don't know about you, but if I need some money... 01:11.260 --> 01:12.500 Louder? 01:14.360 --> 01:17.260 I think, well, okay. 01:22.740 --> 01:28.140 The ATM machines and the ATM system. 01:28.460 --> 01:30.880 I'll be talking about vulnerabilities. 01:30.880 --> 01:32.940 Now, this is going to be good. 01:32.940 --> 01:34.140 Pay attention. 01:35.700 --> 01:40.540 I'm going to tell you how to avoid being cheated by the ATM system. 01:40.540 --> 01:44.180 People lose an amount of money that you just wouldn't believe. 01:44.180 --> 01:46.500 It isn't just millions per year. 01:46.500 --> 01:47.900 It's more than that. 01:49.460 --> 01:54.180 I don't have an accurate figure, but then I'm not a bank, so I don't care much. 01:56.820 --> 01:59.760 Of course, the other banks don't care much either. 02:01.120 --> 02:03.140 Now, here I am. 02:03.240 --> 02:07.320 I'm standing in front of one of these here ATM machines. 02:08.800 --> 02:11.920 And, louder again, oh Lord. 02:14.240 --> 02:16.720 Well, okay. 02:16.720 --> 02:24.400 I'm standing at an ATM machine in the little town of Kirkenes, Norway. 02:25.140 --> 02:32.180 Now, most of you have probably never heard of Kirkenes, but it is the furthest north city in the world. 02:33.000 --> 02:40.080 It is an amount above the Arctic Circle that I just don't even know. 02:40.740 --> 02:42.660 A story about Kirkenes. 02:43.420 --> 02:50.080 It's hard to get any sleep there because if you visit in June, the sun never goes down. 02:50.540 --> 02:57.380 Well, around midnight, I was walking around the town and talking louder and louder and louder. 02:57.380 --> 03:05.740 I was talking to a lady who I suppose lived there, and I asked her, what country is this? 03:06.300 --> 03:08.220 And she said, well, I'm not sure. 03:10.220 --> 03:14.820 And went on to say, well, Norway plows the snow. 03:14.820 --> 03:16.680 Does that answer your question? 03:16.780 --> 03:20.080 Well, partly it did, and partly it did not. 03:20.280 --> 03:40.920 But the point is that I wanted some money, and I went to an ATM machine in this, not God forsaken, that wouldn't be right to say that, but a little town in extreme northern Norway, not very far from North Cape. 03:41.000 --> 03:47.540 North Cape, in fact, is the furthest north land in Europe. 03:49.080 --> 03:51.040 I wanted some money. 03:51.200 --> 03:53.450 Okay, so I go up to... yeah, hey. 03:54.600 --> 03:59.470 You've got to continually, during this, remember Willie Sutton. 03:59.470 --> 04:04.310 Willie Sutton was asked, why do you rob banks? 04:05.370 --> 04:07.010 And you know the answer. 04:07.010 --> 04:08.390 Because it's there! 04:08.590 --> 04:10.670 Yeah, you got it. 04:11.770 --> 04:24.310 Well , that's changed a little bit, and I'm talking about the slightly changed arrangements nowadays, in that it's not any longer really true that the money is in the bank. 04:24.310 --> 04:27.270 The money is actually in the ATM machine. 04:27.270 --> 04:44.610 And if you go up to a bank on Friday afternoon before a three-day weekend, you will find that the ATM machines at the bank have a lot more money than the bank had at any time during the week. 04:44.730 --> 04:47.970 The amounts tend to be really enormous. 04:48.490 --> 04:56.610 For a three-day weekend, having $10,000 in the ATM machine is simply not enough at most banks. 04:57.650 --> 05:03.410 Okay, so what I do is, I stick a card into the ATM machine. 05:03.570 --> 05:05.030 And this is a card... 05:06.110 --> 05:07.790 You're going to say it louder. 05:12.020 --> 05:13.940 I may need help. 05:15.400 --> 05:18.800 I'll appeal for help if this gets much worse. 05:19.320 --> 05:21.820 So I stick a card in the machine. 05:21.820 --> 05:27.820 And this is a card that was issued to me by my own bank somewhere in central New Hampshire. 05:27.820 --> 05:36.780 Now the connection between extreme northern Norway and central New Hampshire is not particularly obvious. 05:37.380 --> 05:41.760 They are distant from almost any point of view that you take. 05:44.180 --> 05:48.720 The card that I was issued has a magnetic stripe on the back. 05:48.720 --> 06:05.500 And as it turns out, what's in that magnetic stripe is simply an address for the bank and some other information about the bank and the account associated with that card. 06:07.900 --> 06:10.800 That's on that magnetic stripe on the back. 06:10.800 --> 06:19.160 Which you ought to learn more about from somebody else because there are some real problems associated with these stripes on the backs of cards. 06:19.380 --> 06:25.220 The machine then asks me for a pin and asks me how much money do I want. 06:25.860 --> 06:31.000 Hey, being a fairly honest guy, I'll tell them I want a reasonable amount of money. 06:31.420 --> 06:35.020 If I was different, I would say, well, just give me all of it. 06:36.100 --> 06:37.720 Some people do that. 06:41.560 --> 06:50.380 Now, the machine, after it's got the pin, gurgles for a while. 06:50.380 --> 07:02.140 And then in a surprisingly short period of time, usually of the order of 10, 20, 30 seconds at most, delivers the money to me. 07:02.740 --> 07:09.960 Since I was in Norway, of course it delivers Norwegian kroner, whatever a kroner is. 07:11.900 --> 07:16.580 I suppose in English it would be called a crown, but it's not that big a deal. 07:18.380 --> 07:36.760 So after I put my card in the machine, type in the four-digit pin, I walk away and the machine is now happy and the transaction is completed after it delivered me my money. 07:36.760 --> 07:58.200 Now, one question I have is that in this whole transaction, where I inserted a card into the machine, typed in a pin, and undoubtedly there were messages going back and forth between various banks and things of that sort, a real question is, what happened? 07:58.520 --> 08:04.380 And to some degree, I'm going to leave that as a homework exercise for you, it's not easy. 08:04.380 --> 08:20.520 A surprising amount of attention has to be paid to actually who knew what at the beginning of this process and what they found out, what information they sent and what information they received. 08:20.700 --> 08:24.300 Which I'll sum up by saying, what happened? 08:24.300 --> 08:26.920 It is not particularly easy. 08:26.920 --> 08:39.740 In fact, obviously the bank in extreme northern Norway never heard of a bank in the boondocks of central New Hampshire. 08:39.860 --> 08:52.340 So somehow or other, messages had to be transferred back and forth between these two entities, which are not, from any other point of view, close to each other in any possible sense. 08:52.340 --> 09:03.820 And so you have to remember that it's not clear with these messages just who is sending it to who and what information is being sent. 09:03.820 --> 09:06.160 That's the thing you have to think about. 09:06.400 --> 09:08.560 And I will help with that. 09:09.760 --> 09:29.740 Now, the parties to this overall transaction are me, that's the guy standing in front of the ATM machine, the bank in Norway that owns the ATM machine and the bank in New Hampshire of which I am a customer. 09:30.680 --> 09:35.700 This is all not supposing, nobody was telling any lies or anything of that sort. 09:35.700 --> 09:37.420 It's all straight stuff. 09:39.480 --> 09:49.240 Now, there are a number of requirements that are particularly obvious as this transaction goes on. 09:49.720 --> 09:57.560 And the parties to this transaction have their own needs that may well not intersect to any degree. 09:58.080 --> 10:10.840 The customer, that's me, wants some money and does not want, obviously, the system to drain his checking account, which is the kind of thing that might happen. 10:10.840 --> 10:13.440 I mean, you guys know about identity theft. 10:13.560 --> 10:26.820 Well, this is the same general kind of thing, differently detailed, but about the same in the general sense that you wind up with a heck of a lot less money and somebody else winds up with a heck of a lot more money. 10:28.740 --> 10:36.700 But the other... so I just want the money and I don't want the system to drain my checking account. 10:37.060 --> 10:43.060 I also probably don't want my PIN to be broadcast all over the world. 10:43.900 --> 10:52.700 The PIN is something I care about and I would prefer to keep that a little bit close to the chest. 10:53.860 --> 10:58.120 The bank in Norway has just distributed 11:01.520 --> 11:11.120 a thousand dollars or so, I'm sorry, a thousand kroner or so, and it wants some assurance that it's going to get back its money. 11:14.060 --> 11:15.660 And that's about it. 11:15.660 --> 11:20.180 I am not a customer of this bank, so it doesn't care about me very much. 11:20.180 --> 11:22.420 It knows that I'm not a customer. 11:22.700 --> 11:27.800 It mostly cares about its own customers, not about me. 11:29.460 --> 11:36.120 The bank in New Hampshire, I am a customer of that bank. 11:36.120 --> 11:43.580 They want to keep me reasonably happy, but they've got some other problems facing them. 11:43.580 --> 11:56.920 They have to make sure that I am really who I say I am and that I've actually got the money in the account to pay this amount out. 12:00.560 --> 12:06.280 So it doesn't want any responsibility, for example, of a customer. 12:06.280 --> 12:12.180 A customer is actually not the person that he claims he is or she. 12:14.960 --> 12:25.300 The bank in Norway simply wants the whole transaction to settle down with it not either gaining or losing any money. 12:25.300 --> 12:38.760 Again, I'm not a customer of that bank, but it mainly wants to make sure that it is someday reimbursed for the money it gave me. 12:38.760 --> 12:47.600 It gave me a thousand something or others, a thousand kroner, and it wants to get that back somehow from the ATM system. 12:47.600 --> 13:01.940 Now the ATM system is a very large, very widespread system that exists all over the world, in fact, and I have used it in quite a few foreign countries, including Norway. 13:04.860 --> 13:06.960 So there are three pieces here. 13:06.960 --> 13:18.920 There's the ATM machine that you're standing in front of, the ATM system that in some sense is worldwide or very nearly worldwide. 13:19.120 --> 13:23.500 I know that it works in almost any European country. 13:23.860 --> 13:25.580 I was in Hungary last week. 13:25.580 --> 13:26.760 I didn't try it there. 13:26.760 --> 13:28.580 I don't know what would have happened. 13:28.580 --> 13:30.580 I guess. 13:31.440 --> 13:38.640 When I was staying in Budapest, I asked, is the hotel air-conditioned? 13:38.980 --> 13:43.400 The answer was, well, it has Hungarian air-conditioning. 13:44.680 --> 13:46.660 Nice place, very pretty place. 13:46.660 --> 13:59.840 It does... and it's not a third world country by any means, but it is not quite up to our standards for high range hotels. 14:00.800 --> 14:02.200 Okay. 14:07.010 --> 14:11.690 We have these parties to the transaction. 14:11.690 --> 14:20.720 Me, the ATM that I'm in front of, the bank that owns the ATM, and then some network that I'm not going to describe. 14:20.720 --> 14:23.140 It would bore you to tears. 14:23.140 --> 14:27.520 It actually connects all this together in a worldwide sense. 14:28.040 --> 14:31.440 And I'll call that just the ATM network. 14:31.460 --> 14:32.600 It is important. 14:32.600 --> 14:44.160 Without that, you wouldn't be able to use the ATM card in a whole lot of places without the ATM network existing. 14:48.980 --> 14:56.860 Well, what does one have to do to make all this work out? 14:58.560 --> 15:19.140 When you type the PIN into the ATM that you're standing near, right behind you, over your right or left shoulder, there is a person who is busily writing down the PIN you typed, which you can easily see over your shoulder. 15:19.140 --> 15:19.800 Fine. 15:19.800 --> 15:22.540 It's called shoulder surfing. 15:23.460 --> 15:32.880 And that is actually a major loss to the financial system because that kind of thing happens much more than you would believe. 15:32.880 --> 15:38.620 It is not just millions of dollars, it is more than millions of dollars. 15:41.080 --> 15:49.480 And that is the first vulnerability I'd like to talk about, and it is a serious vulnerability. 15:49.880 --> 16:02.420 I would advise you when you're at an ATM and about to punch in your PIN, just look over your shoulder, both shoulders, and see who is there copying it down. 16:03.400 --> 16:05.140 This is not unusual. 16:05.140 --> 16:18.760 It has not happened to me, but it has, for example, happened to my wife, where someone managed to see what PIN she was typing in and used it to extract quite a lot of money from the system. 16:18.760 --> 16:32.660 There is normally some limit of the amount that you can get out of ATMs per day, and that limit is designed so that you don't go broke if somebody steals your PIN or your card. 16:32.660 --> 16:35.380 You just get a little bit poorer. 16:36.400 --> 16:40.260 So that is the first vulnerability. 16:43.100 --> 16:44.800 There are others. 16:46.160 --> 16:48.640 I was in... why am I talking about Norway? 16:48.640 --> 16:52.060 Well, because I spent a lot of time in Norway last year. 16:52.060 --> 17:07.460 I walked up to an ATM machine in Bergen, that's in Norway, and I put in my card. 17:07.640 --> 17:09.460 It told me to punch in my PIN. 17:09.460 --> 17:11.120 I punched in the PIN. 17:11.300 --> 17:15.340 It gurgled for a while, and then said, sorry, we can't pay you. 17:15.880 --> 17:16.920 Eh? 17:17.840 --> 17:23.540 It's got all the information on my card, which tells it all about my bank account. 17:23.540 --> 17:29.420 It's got my PIN, and now it tells me it's not going to complete the transaction. 17:29.420 --> 17:55.940 What I did may seem a bit extreme to you, but I called the police, told them, and also pointed out to the bank, which arrived just behind the police, that right near my right hand was a fire axe, and if it didn't give me my card back, I was going to use that fire axe. 17:57.140 --> 18:08.840 Actually, they came in and gave me the card back, and in fact, no money had been withdrawn, so the whole transaction ended just fine. 18:08.840 --> 18:13.760 But still, a fire axe did enter the negotiations. 18:23.220 --> 18:26.640 What does this say? 18:27.800 --> 18:32.600 Why do my notes say, at this point, forklift truck? 18:32.980 --> 18:35.140 Forklift truck? 18:44.010 --> 18:46.690 Give that man a prize. 18:48.110 --> 18:49.790 Definitely. 18:50.750 --> 19:00.810 Forklift truck deserves to be at this point in the presentation, because it is the principal tool for cheating ATM machines. 19:00.890 --> 19:11.890 You slide it in, lift, slide it back, put it in the truck, drive away, and at home, all you need is an acetylene cutting torch, and you have the thing open in 20 minutes. 19:13.610 --> 19:34.990 So, forklift trucks are part of... by the way, I have promised, and I will tell you before the end of this talk, important things you should do and not do when dealing with ATM machines, because I mean to send you away knowing a good deal more about the down-to-earth vulnerabilities of ATM machines. 19:34.990 --> 19:40.430 None of this high-flown theoretical stuff, just things like forklift trucks. 19:42.550 --> 19:46.070 It's important, and people do that. 19:48.090 --> 19:58.870 I can't estimate what the losses are to forklift trucks, but they do exist, and it is 20:03.310 --> 20:08.770 mainly, in fact, an American habit. 20:08.770 --> 20:14.710 I have a slightly different habit, and that is... why am I all of a sudden louder? 20:14.710 --> 20:16.250 Somebody turn me up. 20:24.020 --> 20:35.540 The best deal at this point is you want to get money out of an ATM machine. 20:35.540 --> 20:45.120 You go to eBay, and on eBay you buy an ATM machine. 20:45.800 --> 20:48.780 Hey, they'll sell it to you. 20:49.400 --> 20:52.200 They really are there, and they don't cost very much. 20:52.200 --> 20:57.500 It's actually in the general range of $10,000 for an ATM machine. 20:57.500 --> 21:11.740 Now what you do is you install that ATM machine right over there in some obvious place where people pass by, and the ATM machine is reprogrammed. 21:11.740 --> 21:14.720 It's not a difficult reprogramming job. 21:14.720 --> 21:22.360 When somebody puts their card in, punches it in the pen, it says, sorry, try again tomorrow. 21:24.120 --> 21:27.780 If you don't happen to have a fire axe, you've got a problem. 21:29.500 --> 21:33.160 But that is probably more the British scheme than the U.S. 21:33.160 --> 21:36.200 scheme, though it doesn't matter very much. 21:38.740 --> 21:46.480 So what you have with this scheme is just you have a new machine. 21:47.280 --> 21:57.900 And I would advise you that if you see an ATM in a place where you've never seen one before, don't use it. 22:01.660 --> 22:07.760 Well, again, I'm giving advice, but what can I say? 22:08.020 --> 22:10.380 You want to take a look. 22:10.380 --> 22:20.680 In fact, in the town I live in, several times in the last month, in stores and restaurants that I normally go in, I've seen new ATM machines. 22:20.700 --> 22:23.080 I don't have any reason to believe they're fraudulent. 22:23.080 --> 22:27.480 On the other hand, I also don't have any reason to believe that they're honest. 22:27.480 --> 22:30.020 So I typically do not use them. 22:32.200 --> 22:44.540 So pay some attention to the place that the machine is, and if you run into a machine that you haven't seen before, it would be wise not to use it. 22:44.540 --> 22:56.680 Another problem associated with the whole business of ATM machines, and it includes problems with debit cards and things of that sort also, is banks. 22:57.080 --> 23:03.840 Big deal, honest banks all over the world, but I mainly know it from the U.S. 23:03.840 --> 23:06.360 and U.K. 23:07.120 --> 23:26.800 If you point out to them that they did not give you the money that you deserved, and you've got fraudulent charges on your debit card or checking out through the ATM machine, they will simply lie about what has happened. 23:26.800 --> 23:30.900 There's several famous cases, both in the U.S. 23:30.900 --> 23:59.900 and in the U.K., where it was perfectly clear that the problem was solved by the bank software, and the bank denied that it possibly could happen, and simply said that if the customer is claiming to have lost money through an ATM machine or a debit card, 23:59.900 --> 24:03.480 that the customer is lying. 24:03.480 --> 24:10.520 One of these cases actually came to court and was well defended, and the bank lost very big. 24:10.520 --> 24:21.260 They still try to do that, but they do it with much less success now, because after one big case has gone against them, it makes it more difficult. 24:21.260 --> 24:33.400 What they did in the first case was actually filed a criminal complaint against the person that was complaining about the loss of money in the ATM system. 24:33.760 --> 24:36.360 And that seems a little bit outrageous. 24:42.670 --> 24:48.810 I better finish all this technical stuff so I can give you all this valuable advice that you want. 24:58.020 --> 24:59.620 The way 25:03.100 --> 25:24.600 that the system works, the first thing that happens when you begin an ATM transaction is that the bank associated with the ATM machine you are using sends a message to the bank that issued the ATM. 25:24.600 --> 25:32.740 And there is not much that needs to be said at that point, and in fact, essentially nothing is said. 25:32.800 --> 25:43.520 The message that goes from the ATM machine through the ATM network to the issuing bank simply says, Hello, I've got a message for you. 25:43.700 --> 25:57.940 The response is that the bank dreams up an encryption key and sends that key back to the customer. 25:58.380 --> 26:02.560 This is fairly standard stuff nowadays in cryptography. 26:02.560 --> 26:21.800 There are any number of ways associated with cryptographic schemes where encryption and decryption, one is much more difficult than the other. 26:22.800 --> 26:35.130 So that all you need to do is send one party to send a key to the other, and now transmissions in the other direction become much, much easier. 26:35.640 --> 26:42.140 And this is not only a common but almost universal practice in cryptography nowadays. 26:49.090 --> 26:55.110 Okay, look over your shoulder when you type in the PIN. 26:55.210 --> 26:56.000 Important. 27:01.130 --> 27:12.470 Pay some attention to the place where you see the machine, and if you recognize something as being a new machine, go somewhere else. 27:21.170 --> 27:26.670 A stolen card is not a terribly big deal. 27:26.670 --> 27:41.150 I don't know about you generally, but my bank will only let me withdraw $200 per day through the ATM system, which means that the amount of loss is relatively limited. 27:41.150 --> 27:44.130 I mean, that's annoying, but not absolutely disastrous. 27:45.730 --> 28:03.930 Another piece of advice, though, is the ATM machines, mostly after they give you your money and that kind of good stuff, and give you your card back, one hopes, give you information in the form of a receipt. 28:04.130 --> 28:10.090 The receipt talking about what the account was, what the amount was, what the date was, things of that sort. 28:10.090 --> 28:18.590 And my advice about that piece of paper, that receipt, is don't leave it next to the machine. 28:18.590 --> 28:20.290 Don't simply drop it. 28:20.710 --> 28:21.530 Take it with you. 28:21.530 --> 28:23.830 Take it away from the machine, take it with you. 28:23.830 --> 28:36.290 Because that plus the four-digit key, which the same guy has just read over your shoulder, is enough for him to drain a good deal of money out of your account. 28:36.290 --> 28:43.190 So, when and if a receipt appears, take it with you, don't leave it at the machine. 28:43.670 --> 28:51.210 And that makes it much more difficult and much more inconvenient for anyone to drain the account. 28:54.390 --> 29:00.570 The other advice is, I assume that some of you are going to need money in the next few days. 29:00.570 --> 29:02.310 Yeah, almost certainly. 29:02.810 --> 29:12.610 I recommend that when you want money, tomorrow and the day after, please get it from the ATM machine in the lobby of this hotel. 29:14.830 --> 29:17.230 And I don't need to talk anymore. 29:17.230 --> 29:20.250 Does anyone want to ask any questions? 29:20.410 --> 29:22.230 Or should I talk about something? 29:22.230 --> 29:25.370 I didn't talk at all about cryptography, really. 29:25.550 --> 29:32.150 And one of the reasons is that cryptography does not really come up as a prime problem. 29:32.370 --> 29:36.670 What the prime problem is, in fact, is key distribution. 29:38.170 --> 29:41.470 It's not the algorithm that you use to do the encryption. 29:41.470 --> 29:48.290 It's who's got the key and where did that entity get the key is the problem. 29:48.290 --> 29:50.770 That's work that Scott's been talking about. 29:50.830 --> 29:52.530 And I've run out of data. 29:52.530 --> 29:53.870 Thank you for coming. 29:54.050 --> 29:55.730 Unless there's any questions. 29:57.050 --> 29:58.910 I see no questions. 29:59.030 --> 30:00.270 Have a good day.