New Android Smartphone malware has been identified that gets around the security systems used by banks and other financial institutions to keep customers protected. The malware is managing to intercept messages that are sent to customers’ Smartphones used as part of the bank’s two-factor authentication system. However, an update to the Android Smartphone malware means it is now capable of intercepting passcodes on more robust 2FA systems.

Two-factor authentication is not infallible

Two-factor authentication offers enhanced security for bank customers. Rather than relying on a username and a password, and additional factor is used to verify identity. A one-time passcode is sent to a user’s Smartphone and that passcode is then used to authorize a transaction. If the passcode is not entered the transaction cannot be made. The codes are sent to the Smartphone via SMS in most cases, although some banks use an automated voice call to deliver the passcode.

This means that even if a user’s login credentials are obtained by a criminal they cannot be used to authorize a bank transfer unless the attacker has also managed to obtain the Smartphone of the account holder (or other device registered with the bank and used for two-factor authentication.)

While two-factor authentication makes it harder for fraudulent transactions to be made, the system is not infallible. In fact, the account holder’s device does not even need to be stolen in order for a criminal to empty a bank account. If malware can be loaded onto the device that can intercept the SMS text this will allow an attacker in possession of the login credentials to make fraudulent transfers.

Automated voice call passcode delivery intercepted by Android Smartphone malware

SMS messages can be intercepted easily if malware is installed on a device. Because of this, some banks are moving away from SMS passcodes and are now favoring the delivery of codes via an automated voice message. However, the latest android Smartphone malware is capable of obtaining these passcodes as well.

Android.Bankosy malware has been adapted to beat this system of passcode delivery. The malware will simply forward the voice call to the attacker, unbeknown to the victim. This is possible because Android.Bankosy is capable of enabling silent mode on the phone so the user is not aware that a call is being received. If the attacker has the login credentials, a transaction can be initiated. The voice call is redirected to the attacker, and that code is then used to complete the transaction.