1McAfee Virtual Criminology ReportCybercrime Versus CyberlawThe annual McAfee global study on organized crime and the Internet in collaboration with leading international security experts.454868.45 5 48 89 8 488.5545 689645645 866 6654568 688.54 58 486 868 8454868.45 5 48 452878289 8 488.5545 689644 822.6564568 45 4582 688.54 58 486 86484 8 81Foreword Cybercrime is a growing problem that negatively impacts everybody. While a lot has been done to combat cybercrime over the past decade, criminals still have the upper hand. Some experts have argued that a cyberattack could be more economically devastating than the physical attacks on September 11, 2001, so clearly something has to change. This year’s McAfee® Virtual Criminology Report discusses what factors can drive that change. Global cybercrime has a significant financial impact on businesses and consumers across the globe, while wider use of technology in developing countries is further opening the window of opportunity for evildoers. As part of McAfee’s effort in the fight against global cybercrime, we recently launched the McAfee Initiative to Fight Cybercrime, a wide ranging initiative aimed at closing critical gaps in the battle against cybercrime. Although we have new cybercrime laws, and recent indictments, we believe there’s still more progress to be made.You’re about to read our fourth annual Virtual Criminology Report. This year the report discusses the extent to which cyberwar is winning the battle over cyberlaw. It highlights exactly why the McAfee Initiative to Fight Cybercrime is needed.For this report, we consulted with more than a dozen security specialists from top institu-tions across the globe. These individuals, who are also on the front lines in the daily fight against cybercrime, were invited to comment on the extent to which cyberlaw is keeping up with the crimes being committed, and provide insight into how we can actually fight – and win – the battle against the perpetrators of cybercrime.The conclusions? Read on for the details, but at the highest level the experts agree that international action on cybercrime law, enforcement, prosecution and judging is needed. Fighting cybercrime is a 24/7 battle, a global battle, and it’s only just begun. Dave DeWaltPresident & CEOMcAfee Inc.CONTENTS ForewordIntroductionChapter One: Global Meltdown – The Scale of the ProblemChapter Two: The Frontline Fight Against CybercrimeChapter Three: International Cooperation – Myth or Possibility?Chapter Four: Next StepsContributors 124 10 18 2426Virtual Criminology Report ContributorsDr. Ian BrownLilian EdwardsMatthew BevanSharon LemonBob Burls MScPeter SommerRichard ClaytonPhilip VirgoMatthew PembleJames BlessingPeter MilfordDr Marco GerckeMarc VilanovaHaim VismonskiFerenc SubaErka KoivunenEugene H SpaffordAndrea MatwyshynMary KirwanLeo AdlerDr. Paulo Marco Ferreira LimaAdriana Scordamaglia Fernandes MarinsRenato Opice BlumAlana MaurushatPeter GuttmanAndrew AdamsIntroduction23The annual McAfee Virtual Criminology Report has traditionally tracked the emerging and looming trends in cybercriminal behaviour and exposed how it has become increasingly organ-ized, sophisticated, and global in its approach and impact.This year, in collaboration with cybercrime experts from across the world, the fourth annual McAfee Virtual Criminology Report reveals the extent to which cybercrime is winning the battle over cyberlaw and that a massive and coordinated global effort is required to redress the imbalance.Commissioned by McAfee, Dr. Ian Brown from the Oxford Internet Institute and Lilian Edwards, Professor of Internet Law at the University of Sheffield in the UK, undertook extensive research with legal authorities, law enforcement agencies and security experts across the globe to assess the current state of the fight against cybecrime and to evaluate the threats and challenges to gaining a global approach for the future.Three Key Findings EmergedFirst, cybercrime isn’t yet enough of a priority for governments around the world to allow the fight against it to make real headway worldwide. Added to that, the physical threat of terrorism and economic collapse is diverting political attention elsewhere. In contrast, cybercriminals are sharpening their focus. Recession is fertile ground for criminal activity as fraudsters clamour to capitalize on rising use of the Internet and the climate of fear and anxiety. Are we in danger of irrevocably damaging consumer trust and, in effect, limiting the chances of economic recovery?Second, cross border law enforcement remains a long-standing hurdle to fighting cybercrime. Local issues mean laws are difficult to enforce transnationally. Cybercriminals will therefore always retain the edge unless serious resources are allocated to international efforts.Third, law enforcement at every level remains ad hoc and ill-equipped to cope. While there has been progress, there is still a significant lack of training and understanding in digital forensics and evidence collection as well as in the law courts around the world. The cyberkingpins remain at large while the minor mules are caught and brought to justice. Some governments are guilty of protecting their in-country offenders. The findings suggest there is an ever greater need to harmonize priorities and coordinate police forces across physical boundaries.The report concludes with a look at suggested steps at both the local and international level to make the fight against cybercrime more effective.45CHAPTER ONE Global Meltdown – The Scale of the ProblemHow the Economic Downturn is Set to Exacerbate Security Issues Cybercriminals Are Becoming Increasingly Mobilized and UntraceableA vast number of insecure Internet-con-nected machines now provide a safe haven for cybercriminals. Recent figures suggest that the number of compromised zombie PCs in botnets has quadrupled in the last quarter alone and that these are capable of flooding the Internet with more than 100 billion spam messages per day. Botnets are increasingly switching to phishing, distributed denial of service (DDoS) and website attacks which are capable of causing a huge amount of damage and are a growing threat to the security of nations, the national information infrastructure, and the economy.New ways of laundering illicitly gained money are also emerging. Online fraudsters are using a variety of untraceable means by which to launder the proceeds of crime. While