Japan's Cybercrime Underground On The Rise

When you think cybercrime, Japan probably isn't top of mind. But like anywhere else, the bad guys there are following the money, and an emerging yet highly stealthy underground economy is growing in Japan.

Researchers at Trend Micro's Forward Looking Threat Research team studied the inner workings of Japan's cybercrime activity, and found some interesting characteristics. Japan is still a newbie here, and the bad guys have a higher bar to clear given the nation's strict criminal laws. So Japan's cybercriminals don't write their own malware due to the tight legal environment against such activity there; they instead buy malware from their counterparts in other nations.

Cybercrime operations there include the illegal buying and selling of counterfeit passports, phone number databases, stolen credit card credentials, hacking advice, child pornography, drugs, and guns  -- all via secured bulletin boards that carefully vet visitors, employ Japanese-language CAPTCHAs, virtual PO boxes, secret jargon, and accept payment mainly via Amazon gift cards or Sony PlayStation Store codes.

"They're building a greater foundation for guilds of thieves in Japan," says Tom Kellermann, chief cybersecurity officer for Trend Micro. These cybercrime forums operate under heavier security than do many of their counterparts in other nations, he says.

"Other [nations' cybercriminals] are starting to retrofit operational security. You're seeing them [Japanese cybercriminals] build it from the ground up," Kellermann says. "Their number one focus is stealth, remaining covert in their operations and obfuscating their activities."

Trend Micro researchers found a Japanese BBS called Tor 2 Channel that came with a fake homepage emblazoned with a warning that it had been seized by the FBI, Europol, and the US Department of Homeland Security Immigration and Customs Enforcement. But clicking on one of the national flag icons on that page led to actual BBS sites, the researchers discovered.

Japan's cybercrime operations mainly target Japanese citizens. But their interest in banking malware, ransomware and DDoS tools would indicate their targets could go global, Kellermann says.

Reports of cybercrime in Japan are on the rise: as of March 2015, the number of reports of possible online crime have increased 40% over the previous year, according to data from Japan's National Police Agency. Online bank fraud has resulted in losses of $24 million in 2014, and the cost of online fraud to Japanese banks was $13 million in the first half of this year. Pilfered banking credentials were the likely culprit, Japanese officials say.

"For a country that has a relatively high Internet penetration rate of 86% off a base population of nearly 127 million, a 40% increase is a big deal," Trend Micro wrote of Japan's increase in cybercrime.

In a high-profile hack in June of this year, Japan's Pension Service was hit with a data breach exposing more than one million users' names, ID numbers, birthdates, and physical addresses.

Trend Micro's own data found that Japan was second to the US in nations hit by online banking malware last year. In the second quarter of this year, Japan was the number one nation hit by the Angler exploit kit, according to Trend's data.

Meanwhile, two-factor authentication and chip-and-PIN cards are mandated in Japan, Kellermann notes. "The fact that Japan is experiencing the second largest crime wave is more than likely under-reported," he says of the data.

"They are years ahead of us [the US] in mobile payments," he says.

Japanese cybercriminals typically use watering hole or other secondary infection methods to plant malware on their victims' machines, according to Trend.

Kellermann says he expects Japanese cybercriminals will ultimately write their own malware. "There's far too much talent" for them to not create their own tools, he says. "This is in line with the cultural manifestation of a lot of people in a society disaffected with the government."