State-sponsored banking virus found in Middle East

State sponsored spying is not new. It has been practised time and memorial. But in the banking world, the regulator is a watch dog from distance with rights to do operational audit and do a fact finding post mortem. However, I see two key issues arising from this report -

1. The regulatory mechanism of transaction monitoring and reporting system should ensure that particular types of transactions as per pre-defined parameters are reported to the regulator as per the frequency post or during on-line transaction. Not sure if that mechanism is in place.

2. Why the state regulators decide to implant a virus in a surreptitious manner, while they have the authority to ask banks to instal a legitimate application provided by the regulator properly integrated with the online or other transaction processing systems of the banks. Why regulators did not think of that.

Regulators have to come out openly with more innovative ideas of control and monitoring in light of changed society, and more importantly regulators themselves have to equip better with the changing times, rather than using sneaky ways of monitoring and control.

It depends on from which country the spying government agency comes - if it is a foreign government department, it is spying. If it is the domestic government banking supervision authority it can at best be considered as unusual supervision. In most countries the FSA activity is regulated on procedure rules and would not allow the FSA to plant spyware into bank computers or bank customer PC:s. So the 1000 dollar question is - from which government did this spyware come? The security lab should have a good opinion.

Not sure whether the headline "State-sponsored banking virus found in the Middle East" is appropriate. It is widely agreed that the original Stuxnet malware was probably built by some state-sponsored agency or agencies - but Stuxnet is in the wild now since quite some time. Skilled criminals can find access to that code, and are apparently now trying to leverage parts of that malware for their own purposes.