As Geopolitical Tensions Mount, Iran's Cyber Operations Grow

In its latest cyberattack on a Middle Eastern nation using its proxies in cyberspace, Iran continues to ramp up its cyber operations against rivals and allies.

In the attack, a cyber-espionage group linked to Iran's Ministry of Intelligence and Security (MOIS) and known as APT34 targeted government ministries in Iraq, a nation that was once an enemy and now is sometimes a rival and sometimes an ally of Iran. The attack had all the hallmarks of the group, also known as Hazel Sandstorm: custom infrastructure using email tunneling for communications, use of two malware programs similar to previous APT34 code, and domain-naming schemes similar to previous operations.

Previous attacks by APT34 (aka OilRig, Helix Kitten, and Hazel Sandstorm) using similar tools and methods targeted other nations in the region, including Jordan, Lebanon, and Pakistan, according to an analysis by cybersecurity firm Check Point's research group.

"The goal is likely espionage, because those countries are at least, to some degree, allies of Iran, so I don't think, in this case, the main goal is destruction," says Sergey Shykevich, threat intelligence group manager at Check Point Research. "We also don't have any hints on the technological side that there is any destructive goal, and from what we do see — specifically in Iraq — we clearly see that the goal is data exfiltration and [the like]."

Following the start of the conflict between Israel and Hamas nearly a year ago, rivalries and relationships throughout the region have changed. In late spring, Iran criticized Jordan — and to a lesser extent other Arab nations — for reportedly helping Israel track and interdict missiles during Iran's April 13 attack on the Jewish nation. Meanwhile, Iraq continues to have strong ties to Iran through proxy networks and political parties aligned with Iran.

Iran's Cyber Operations Grow

At the same time, Iran has expanded its cyber operations strategy in the region. A group linked to the Iranian Islamic Revolutionary Guard Corps (IRGC) — and known variously as APT33 (Mandiant) and Peach Sandstorm (Microsoft) — has targeted communications equipment, government agencies, and the oil-and-gas industry in the United Arab Emirates and the United States, typically to gather intelligence, Microsoft stated in August.

Late last month, the US Cybersecurity and Infrastructure Security Agency (CISA) warned that the Iranian group Lemon Sandstorm, also known as Fox Kitten, had leveled ransomware attacks against various countries, and another group, Charming Kitten, or APT42, targeted individuals associated with both the Democratic and Republican presidential campaigns.

Iran is increasingly flexing its muscles in cyberspace, and especially against rivals throughout the Middle East region, says Mohamed Fahmy, a cyberthreat intelligence researcher with cybersecurity firm Trend Micro.

"Iranian APT groups, including APT34, have become very active recently in targeting the Middle East, particularly the government sector in the Gulf region," he says. "From what we’ve seen of APT34’s toolset and activities, they aim to infiltrate entities as much as possible, leveraging compromised infrastructure to launch further attacks. ... APT34's primary goals seem to be espionage and stealing sensitive government information."

Evasive New Malware: Veaty and Spearal

In the latest campaign, APT34 used fake document attachments targeting Iraq between March and May of this year, and likely used social engineering to convince users to open the links and run an installer. The attack results in the installation a .NET backdoor. Currently, one backdoor is called Veaty and the other Spearal, and both malware binaries allow command-and-control (C2) of compromised systems.

The techniques used by Veaty and Spearal show similarities to two other malware families — known as Karkoff and Saitama — both of which are attributed to APT34, Check Point stated in its analysis.

Iranian cyber operations groups tend to use custom DNS tunneling protocols and a C2 channel based on email subject lines, according to the research: "This distinctive blend of straightforward tools, written in .NET, combined with sophisticated C2 infrastructure, is common among similar Iranian threat actors."

The capabilities of APT34 and Iran's other groups will only increase, says Check Point's Shykevich.

"They just improve it," he says. "They just use the same content, but each target, or each country they attack, they deploy a new generation of the same concept ..., where they improve it and make it more stealthy [or add other features]."

Companies in the Middle East should focus on implementing a zero-trust architecture to strengthen defenses, including establishing a mature security operations center (SOC) with managed endpoint detection and response (MDR) capabilities, says Trend Micro's Fahmy.

The increased geopolitical tensions in the region will only mean increasing efforts to gain intelligence through cyberattacks, he says.

"Government sectors in the Middle East and Gulf region should take this threat seriously," he says. "These groups aim to blend into the network environment by customizing their malware to avoid detection, [so] understanding their techniques, which have not changed significantly, is crucial."

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