She said nothing so I continued. “The banking industry is only one example of what I’m talking about. But it also happens to be a very visible and prominent example. I figured if I could illustrate some of the weaknesses in the wholesale banking system, maybe people would wake up. And if I could do it without actually stealing any money, then I could claim the moral high road. I fancy myself as the Ralf Nadar of the information integrity business. Now you might argue with that stance, and I’ll concede that what I did was highly illegal, but there you have it — you won’t get any apologies from me over that. But I will apologize yet again for putting you in the hot-seat. That was entirely accidental.”
Our food arrived and I paused to eat. The pause stretched for longer than I had intended, as the food was delicious and I suddenly discovered I was very hungry. Eventually I resumed where I had left off.
“All I wanted to do was double all the transfers between a pair of banks on a particular day. I chose Bendix of St. Louis and First Chicago Trust as the two banks. I could have chosen any two out of hundreds of banks. The choice of those two was entirely arbitrary.”
She had stopped eating. She sat back with one arm folded across her chest while she lightly tugged at her ear with the hand of the other. I took a sip of wine to wet my throat and continued. “I took physical control of the communications line between Bendix of St. Louis and First Chicago on July 11th. By that I mean that I tapped into the phone system and rerouted all calls between the two banks so that the calls were routed through my phone number. Or, more precisely, through the computer in my apartment — this was a data line between the two banks. I won’t describe how I was able to reroute the calls. Let it suffice to say that is was extremely easy and extremely illegal.
“Anyway, having done this, I could monitor all the data transmissions on my computer. Electronic Funds Transfers — EFT’s for short — are sent in the clear, meaning that they are not encrypted. They are transmitted using TCP/IP and the payloads are formatted in ASCII.”
“They don’t use any encryption at all?” she asked. “Its all just ASCII?”
“Right. Anybody can read the messages. Well, anybody that eavesdrops on the phone line. There is no privacy beyond the privacy provided by the basic security of the phone system, which is notoriously bad. Long before there were computer hackers there were phone hackers, and very little has been done in the last three decades to change that. In fact, with the booming business of cellular phones, the situation has become worse.
“But even if the banks don’t encrypt the transfers, they do at least protect them from tampering. They use something called message authentication codes, or MAC’s for short. Each funds transfer has a MAC appended to it. The MAC is a string of bits that is derived from the content of the message in such a way that it is extremely difficult to compute a MAC without knowledge of a secret key.”
“So a MAC is a form of encryption?” she asked. Wrinkles formed on her forehead. She had a very pretty face and this expression suited her features well, much like every other expression I’d seen thus far.
“Yes. It is somewhat analogous to a signature,” I replied, pleased that she was warming up to the conversation. With her background I knew that she would be able to follow the details of the funds transfer protocol; I was anxious to fill her in.
“Or you can think of it as being a lot like a checksum,” I said, offering an alternative intuitive explanation for a MAC. “It is like a checksum because it is a function of the entire message and is very sensitive to even small changes in the content of the message. But unlike a regular checksum, which is designed to protect against only accidental errors, a MAC is all but impossible to alter in a way that is consistent with alterations to the message itself.
“EFT MAC’s are computed using a very common cryptographic algorithm. The algorithm is called DES, which stands for Digital Encryption Standard. DES can be used to encrypt messages or to compute message authentication codes. The American Bankers Association has opted to use it to compute MAC’s.”
She nodded her head and swallowed the large mouthful of bread she had bitten off moments earlier. “OK,” she said. “So you were able to pry and peek at everybody’s payments, including mine. But you said something about doubling the amounts on all of those payments. Yet MAC’s are supposed to make these messages tamper-proof.”