Some 3,000 consumer and commercial online banking customers of one of the world's largest financial institutions have been hit by a targeted attack that combined drive-by exploits, the Zeus Trojan, a botnet, and hijacking of banking sessions to steal more than $1 million from the victims since early July. Law enforcement is now investigating the attack, which remains under way, according to the researchers who discovered it.

M86 Security researchers who stumbled on the attacks say they cannot disclose the name of the U.K.-based bank due to the law enforcement investigation, but the bank is also a household name in the U.S. The victims of the attack are all based in the U.K.

Bradley Antsis, vice president of technical strategy for M86, says the attack on the U.K. banking customers likely is only the tip of the iceberg. "There's no reason why there wouldn't be" similar attacks ongoing against other financial institutions, Antsis says. "These attacks are so automated in nature and easy" to apply to other organizations' customers, he says.

The attackers are running a botnet with command and control servers that are located in Eastern Europe; they used a wide-net approach to capture as many of the bank's customers as possible. They deployed the popular Elenore Exploit Kit and Phoenix Exploit Kit that attack the victim's browser when a victim visits a legitimate website that the gang had embedded with malware via malicious advertisements, as well as when they were lured to fake online advertisement sites set up by the gang. "They used the Elenore exploit installed on the machine in the first stage, and then installed Zeus," for instance, Antsis says.

They went after Internet Explorer, Java, and Adobe vulnerabilities on Windows XP, Windows Vista; Windows 7; and even MacOS machines. "That's how far they threw their net," Antsis says. The attackers took advantage of users not patching or updating their apps and visiting the rigged websites, he says. [UPDATE: M86 said no MacOS machines were ultimately infected].

Once the victims logged onto their online banking accounts, the attackers captured account numbers and user credentials. They employed a man-in-the-browser attack that intercepted the victim's money transactions. "They took what the customer wanted to do and replaced it ... they were rewriting account balances and funneling money to money mules who then sent the money to local accounts" and then to the bad guys, he says. And ironically, the financial institution whose customers were hit offers its customers free security software, too: "Either these victims didn't take it or that software didn't work," Antsis says.

To avoid raising any red flags in the bank's fraud-detection systems, the attackers were careful to only transfer funds when the victim's account had a minimum balance of $1,000, and they moved random amounts of anywhere from $1,500 to $5,000. "The whole idea was to remain under the radar," Antsis says.

Antsis says the targeted attack on the U.K. bank's online banking customers is the most sophisticated M86 has seen yet. "This one brings a lot of the elements that we've seen before together," he says. "It's unprecedented in how sophisticated and targeted it is to the financial institution and the location of its victims."

But other security experts say it's more of the same of what they are seeing with Zeus-based banking crime.

"M86 did a great job in uncovering the command and control servers of this botnet. It's interesting that AVG, M86, and Trusteer uncovered three Zeus botnets at the same time," says Mickey Boodaei, CEO of Trusteer. "Even though there are many more botnets out there, I believe that this is an effective and important activity that damages the fraudsters' ability to deliver, and I'm glad that more security and fraud prevention vendors invest their skills and efforts in this direction. All these botnets and financial malware operations work similarly in the way they infect users, recruit mule accounts, and bypass authentication systems to commit fraud."

Gunter Ollmann, vice president of research at Damballa, says this latest targeted attack follows an increasingly common theme. "It's unfortunately a common attack campaign structure," Ollmann says. "At the moment, we track about 300 different botnet groups that specialize and rely heavily on Zeus malware."

These attackers typically run multiple, specialized campaigns akin to the one M86 discovered, according to Ollmann. "They target an individual or large group and construct messages, phishing sites, and socially engineered sites tuned to a group of cluster of people and launch multiple campaigns that use slightly different themes to the attack," he says. The average Zeus botnet may run anywhere from two to three of these campaigns a week, mixing it up with fake antivirus and other forms of attack as well, he says.

Ollmann says the cost of running multiple targeted attack campaigns against victims isn't much, so there very likely are parallel attacks ongoing by the same group behind the U.K. financial institution attack.

The attack remains active, meanwhile, as law enforcement conducts its investigation, according to M86, which issued a white paper (PDF) today with details on the attack.

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