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PCI-DSS V4.0 Deep Dive 2: Keyed Cryptographic Hashing

May 20, 2024 / / 0 Comments

As we delve into the intricacies of the PCI-DSS v4.0 standard, it’s crucial to understand the significance of each requirement and its impact on safeguarding sensitive cardholder data. For this article, we’ll be focusing on Requirement 3.5.1.1, which revolves around the use of keyed cryptographic hashing for protecting Primary Account Numbers (PANs).


Requirement 3.5.1.1 states that “Hashes used to render PAN unreadable (per the first bullet of Requirement 3.5.1) are keyed cryptographic hashes of the entire PAN, with associated key-management processes and procedures in accordance with Requirements 3.6 and 3.7.”

Firstly, like everything else from interpreting history to interpreting your wife’s nuanced tone when she says, “It’s fine.”, everything needs a little contextualization. Luckily for us, PCI has placed some explanation for us to jumpstart the discussion.

A hashing function that incorporates a randomly generated secret key to provide brute force attack resistance and secret authentication integrity.
Appropriate keyed cryptographic hashing algorithms include but are not limited to: HMAC, CMAC, and GMAC, with an effective cryptographic strength of at least 128-bits (NIST SP 800-131Ar2).
Refer to the following for more information about HMAC, CMAC, and GMAC, respectively: NIST SP 800-107r1, NIST SP 800-38B, and NIST SP 800-38D).
See NIST SP 800-107 (Revision 1): Recommendation for Applications Using Approved Hash Algorithms §5.3.

Definition of Keyed Cryptographic Hash, PCI Glossary

So that’s a lot of MACs.

Let’s break it down. The requirements has 3 areas of importance, which we have helpfully underlined.

Keyed Cryptographic Hashes

The requirement mandates the use of keyed cryptographic hashes to render PANs unreadable. A keyed hash basically takes the entire PAN and combines it with a secret key to produce a unique, fixed-size output that is practically impossible to reverse-engineer without knowing the key. This way, even if an attacker gains access to the hashed PAN, they won’t be able to derive the original PAN without the secret key.

In 3.2.1, this was not stated and therefore the assumption that a simple hash was sufficient. Let’s listen to what this old obsolete standard says: “It is recommended, but not currently a requirement, that an additional, random input value be added to the cardholder data prior to hashing to reduce the feasibility of an attacker comparing the data against (and deriving the PAN from) tables of precomputed hash values.”

That aged like milk. Basically they are talking about salt. The goal of salting is to protect against dictionary attacks or attacks using a rainbow table. If no secret salt is used, or if the salt has not been sufficiently protected, the corresponding data, for example the PAN, can be read from the attacker’s previously calculated dictionaries or rainbow tables. So in short, salts are good for the world. Except for Salt Bae. He’s no good.

Salting creates slow hashing, which is the point. So that it takes a few billion years for brute force to be successful. How different is salting from keyed hashes? For one, salts are generally known. Sometimes they are even stored together with the hash in the database. So if let’s say, that’s compromised, Salt is known. I suppose, you can say “Live by the salt, die by the salt.” Ha!

Keyed Crypto Hashes mean there is a secret key. And before you go and jump off the building, there are already existing algorithms out there (The MAC brothers) that has previously been used — primarily, to my knowledge — for message integrity checks. In fact, the MAC here means Message Authentication Code to check integrity and authenticity. Unlike the salt, it ISN’T known, or at least not unprotected. So even if the database is compromised, they can’t get the key, because it’s protected (through encryption, later on to explain).

Now, why the change from normal hash, with recommended Salt, to hash with secret key?

The problem is with card numbers. Those dang card numbers, which is so different from let’s say passwords. Unlike passwords, where it could really be random, credit card numbers are NOT random. They are unique, but they are far from random. You see, a credit card consist of:

  1. The bank identification number (BIN) or issuer identification number (IIN): The first six digits is the issuer id. You can go https://www.bindb.com/bin-list
  2. The account number: The number between the BIN and the check digit (the last digit) is six to nine digits long and is used to identify the individual account number.
  3. The check digit: The last digit, added to validate the authenticity of the credit card number. This is by using the Luhn algorithm.

The thing about Luhn is that it is used to validate primary account numbers. I am not going into details, as other people have done so and will do a much better job in explaining this. But the short of it is that, if I have the BIN, and I have the Luhn and I have, let’s say 3 more numbers of the account number, then you get the picture. The Luhn digit is the result of the luhn algorithm applying to all the previous numbers (right first to left), which you already known, if it’s truncated! You would already know 9 digits (first six, last three, the last being the final luhn result). It’s likely still going to take a lot of effort, but the predictable way credit cards are structured actually provides less fields to be guessed. As scary as it may sound, hashes can be possibly reversed. Well, not ‘reversed’ per se but ‘reconstructed’ through guesswork and bruteforce.

While salt adds complexity and make it slower, salts aren’t secret, remember, so eventually that can still be broken. A Key however is secret. Remember the data encryption key, key encryption keys? Well, hashing now requires the same treatment as encryption in that sense that these keys need to be encrypted.

The other important bit of this requirement is the requirement emphasizes that the entire PAN must be hashed. This is important because hashing only a portion of the PAN would still leave some sensitive information exposed. By hashing the entire PAN, we ensure that no part of it remains in plain text, adding an extra layer of protection.

Lastly, the requirement stresses the importance of proper key management processes and procedures, as outlined in Requirements 3.6 and 3.7. This means that the secret keys used for hashing must be securely generated, stored, and managed throughout their lifecycle. Weak key management can undermine the entire purpose of keyed hashing, so it’s crucial to get this right.

What does this mean?

It means, like a lot of new requirements in v4.0: more work.

It is, in its heart, a concept of defense-in-depth. Requirement 3.5.1.1 serves as a secondary line of defense against unauthorized access to stored PANs. Even if an attacker manages to exploit a vulnerability or misconfiguration in an entity’s primary access control system and accesses the database, the keyed cryptographic hashing of PANs acts as an additional barrier, preventing the attacker from obtaining the actual PANs, unless they manage to compromise the key.

By implementing a secondary, independent control system for managing cryptographic keys and decryption processes, entities can ensure that a failure in the primary access control system doesn’t automatically lead to a breach of PAN confidentiality. For instance, instead of storing the PANs in plain text, a website employs a keyed hashing algorithm, such as HMAC-SHA256, to render the PANs unreadable. Each PAN is combined with a unique, randomly generated secret key before being hashed, and the resulting hash values are stored in the website’s database.

Final note: It’s important to note that Requirement 3.5.1.1 applies to all instances of stored PANs, whether in primary storage (databases, flat files) or non-primary storage (backups, audit logs, exception logs). This means that entities must ensure that keyed cryptographic hashing is implemented consistently across all storage locations, leaving no room for gaps in protection.

However, the requirement does make an exception for temporary files containing cleartext PANs during the encryption and decryption process. This is a practical consideration, as it allows entities to temporarily work with unencrypted PANs while performing necessary operations, as long as the temporary files are properly secured and promptly removed after use.

If you have any questions or need assistance in navigating the complexities of PCI-DSS v4.0, don’t hesitate to reach out to us at avantedge@pkfmalaysia.com. Our team of experienced professionals is here to help you every step of the way, ensuring that your organization stays secure, compliant, and ahead of the curve in the ever-evolving landscape of data security.

SAQ A and A-EP, the eternal struggle

October 26, 2020 / / 0 Comments

Another week, another lockdown struggle, another political instability and another question on the eternal confusion called the SAQ A and A-EP. And this time, it wasn’t so much of us trying to clarify with the customer on this – but us trying to explain to QSAs on it. It just shows how much confusion there is to this thing even after all these years, that even auditors, whose bread and butter is literally on PCI-DSS still struggle to understand it. I don’t blame them – it’s the way that the SAQs are worded, and the confusion that surrounds it that makes it so frustratingly difficult to interpret.

SAQ A by far gets the most mileage. Not because a lot of people are eligible for it, but because at 20+ questions, it’s by default the go-to SAQ for most organisations, whether they are eligible for it or not. I mean, comparing the SAQ D and the A is like scaling Everest vs the little sand hill that your 5 year old kid just built on the beach. Something like that. So everyone (even non-eligible Service Providers) always default to the Open Shortest Path First, which is the SAQ A when they need to choose an SAQ to be “PCI-Compliant”.

However, SAQ A is notoriously difficult to be eligible for and today we are going to look at it. Again. We have often seen everyone anything from storing card information, to hardcopy storage of insurance policies, to doing outsourced call center picketing in front of our office shouting for their SAQ A rights. I mean, let’s start here with SAQ A and A-EP and the difference.

We are not going to focus on the controls in these SAQ, but rather the ‘eligibility’ of it, meaning, on Page 4 of both SAQ under “Before You Begin”. Instead of just repeating all that is typed in there in this article, I will assume those reading this article is keen for a deeper dive into the murky waters of SAQ and not here for a shallow wade – so I am going to assume you have those SAQs right in front of you and I don’t have to delve into the history much, ok?

SAQ A’s story starts off by stating there are TWO types of business who are eligible for it.

a) E-Commerce Merchants

b) MOTO (mail order/telephone order) – card not present

c) Of course, those who do not STORE, PROCESS or TRANSMIT card holder data in ANY electronic format on their system and premise.

Let’s start with MOTO first, because this often confuses people. Straight away those doing MOTO will dance a jig in front of me and gleefully points out that they deserve the SAQ A. All your base are belong to SAQ A, if those nerds like me would understand. Because I usually move them over to SAQ C or C-VT depending on how their call center/MOTO transactions are set up (even B-IP may apply e.g MOTO function on terminal, but mostly MOTO ends up being in SAQ D because they often store card data on file).

Hold on there though. Eligibility of MOTO is tied to the eligibility of c) – i.e you do not store (OK), process (erm, yeah ok, sometimes) or TRANSMIT card holder. Often the transmit and process part is done when you have people on your premise doing MOTO. The moment a phone call comes in – BAM! you are hit. You are done for.

So the ONLY time MOTO is eligible for SAQ A is later described in the SAQ:

Mail order/telephone order (MOTO) or e-commerce merchants that have completely outsourced all operations (where there is no redirection mechanism from the merchant to the third party) and therefore do not have any systems in scope for this SAQ, would consider these requirements to be “not applicable.”

SAQ A

The above is talking about how we can mark Requirement 2,6 and 8 as Non applicable. But notice where it states: COMPLETELY OUTSOURCED ALL OPERATIONS. This means, your company’s MOTO transaction is never done by your own company or on your own premise or by your people or using your technology. You have Completely, irrevocably, irreversibly outsourced the entire function to someone else who is PCI-DSS compliant. Then OK, you cool.

So now we know how to deal with that MOTO part. Oh wait, wait. There is a scenario from one client, where customers actually come over to the counter and try to make payment. However, because they have upgraded everything, instead of dipping or waving that card into a terminal for a POS payment, the counter person whips up a high tech iPad, connects to the companies website, looks at the credit card (while the customer is in front of them) and type out the transaction onto the e-commerce site itself for the transaction. How do we deal with this?

Well. This certainly doesn’t qualify for SAQ A in a strict sense, since this is considered a ‘face-to-face’ channel. However, logically, that transaction is made as an e-commerce, card non present transaction, because the CVV is entered as well and on the merchant end, it qualifies as a e-commerce transaction based on the flow and the fee they are paying. This is an interesting scenario as I would likely look at it as an e-commerce flow, since technically, the customer can do it themselves, but its just that for some reason, maybe they don’t know how, or they can’t figure it out, they go over to the counter to do it. The acquirer certainly doesn’t know about it. But because the information is going through the company’s asset, the company’s line, the company’s network, there would be additional risk they need to consider. In the end, it would be the call of the QSA on how they view this, however, I don’t think this could qualify for an SAQ A channel. It could be technically treated as a SAQ B-IP as we can assume its a terminal, but most auditors, to err on the side of caution may just opt for the full SAQ D on this.

OK, MOTO done.

Now for the e-commerce. I am not going to repeat what I’ve written some years back: https://www.pkfavantedge.com/it-audit/pci-dss-saq-a-and-saq-a-ep-differences-in-a-nutshell/

But I am just going to dive right in where the confusion begins. SAQ A-EP is written in a way that confuses people, and requires some sort of Indiana Jones exploration to figure out what in tarnation they are trying to get at.

So, under Before you begin, the second eligibility point (we call this ITEM 2):

Item 2: “All processing of cardholder data, with the exception of the payment page, is entirely outsourced to a PCI DSS validated third-party payment processor;”

This is confusing. They say – “All processing of cardholder data EXCEPT the payment page”. This means, the payment page actually SITS with the merchant, while everything else is outsourced to PCI third party. This means, this SAQ is eligible for merchants with PAYMENT PAGE (where credit card is entered) residing in their premise. So therefore, if the PAYMENT PAGE is also outsourced, immediately, this SAQ is no longer eligible. In a simple logic:

if (paymentpage) then { read next line;} elseif (!paymentpage) { exit();}

That means, SAQ A-EP doesn’t apply anymore to us if we have outsourced the payment page because this condition is not met, and therefore the if statement should exit, or if you are in a loop, it should end. SAQ ENDS.

The problem is auditors are generally non-programmers and even when the condition is no longer eligible, they keep going!!

And it’s really, the next line that is the confusion of all confusion:

Item 3: “Your e-commerce website does not receive cardholder data but controls how consumers, or their cardholder data, are redirected to a PCI DSS validated third-party payment processor;”

I mean, if we had exited the SAQ loop on the second condition, we won’t need to deal with this nonsense. So let’s break it down. YES, my e-commerce website does not receive card holder data, since I outsourced ALL MY PAYMENT page already to third party. But wait, you are saying “CONTROLS’ how consumers or data are ‘redirected’ to a third party? What? Obviously there is an element of control here, so how do we define ‘control’? Isn’t redirecting to an outsource payment page CONTROL?

The next confusion is the next line:

Item 4: “If merchant website is hosted by a third-party provider, the provider is validated to all applicable PCI DSS requirements (e.g., including PCI DSS Appendix A if the provider is a shared hosting provider);”

Hold up – didn’t we already agree that if the merchant entire website is hosted by a third party PCI provider, this would already not be in SAQ A-EP (see the exit rule of item 2). In fact, isn’t completely outsourcing the website the whole point of SAQ A? What sort of black magic is this?

Item 5: “Each element of the payment page(s) delivered to the consumer’s browser originates from either the merchant’s website OR a PCI DSS compliant service provider(s);”

Look at this wording. Look at it. Tell me that this is not contradicting item 2, the ‘with exception of the payment page’ condition. Let me rephrase item 2:

“You can go for SAQ A-EP if you host your payment page and have outsourced your processing to a PCI third party” –therefore implying that if you don’t host payment page and outsource everything, then another SAQ (SAQ A) applies.

Item 5 slaps Item 2 in the face and goes, “No. SAQ A-EP for you if you host the payment page, or the payment page is hosted by your PCI-DSS service provider. So no, Item 2, you wrong. You dead wrong.”

That usage of the word “OR” in that sentence confuses programmers or those with IT background, I think. This is a logical connector where if condition A OR condition B, if any of this is TRUE or both TRUE, we enter into the loop. Compared with the AND connector, where both needs to be true, otherwise we don’t process the loop. So the above statement is stating “ANY CONDITION WHATSOEVER” since it uses “OR”, will need to apply SAQ A-EP.

In fact, if they had clarified if all of these conditions are connected to each other either through the AND or OR operator, it would makes much more sense to us. It’s like the question, “Are you going to do it now OR do it later?” and we answer “Yes!” because we are indeed doing it now or later, and the question didn’t specify which condition as long as we are doing it.

Anyway, back to the story. The note in SAQ A-EP states:


For the purposes of this SAQ, PCI DSS requirements that refer to the “cardholder data environment” are applicable to the merchant website(s). This is because the merchant website directly impacts how the payment card data is transmitted, even though the website itself does not receive cardholder data.

SAQ A-EP OMINOUS NOTES

It is very ominous. It states, even if your website does not receive card holder data, you still impact or ‘control’ how the payment card is transmitted.

All is not lost though, because if you flip back to SAQ, under the SAQ A notes:

For this SAQ, PCI DSS Requirements that address the protection of computer systems (for example, Requirements 2, 6, and 8) apply to e-commerce merchants that redirect customers from their website to a third party for payment processing, and specifically to the merchant web server upon which the redirection mechanism is located

SAQ A OPTIMISTIC NOTES

I mean, I don’t know how clear it needs to be. It states in SAQ A “FOR THIS SAQ” – apply to merchants that ‘REDIRECT’ customers FROM their website (merchant website) to 3rd party for payment processing and specifically TO the merchant web server where the redirection occurs.

I am going to clarify the phrase that is underlined. the word “TO” is a preposition of the verb “apply to” in the earlier sentence, i.e this applies to merchants, specifically to their web server etc etc. Why its confusing here is because some may read it as a preposition to indicate direction , i.e redirect customers from their website to a 3rd party, specifically TO a merchant web server etc etc, which basically indicates the redirect is going into a loop (from merchant site to third party back to the merchant site) which doesn’t make sense.

I just want to point this out as I may not be the only one confused with this play of words and irresponsible usage of the preposition “TO”. Only me? Ok, fine.

Anyway – long story short, we used the notes in SAQ A to get out of jail for our client, and the QSA seemed to be resigned to that, noting there is a huge huge confusion with how A-EP is written. You do need to know, A-EP was born after A, so definitely, there would be some contradiction since they weren’t written together. SAQ A-EP is like the grumpy uncle that sits in the corner in your Christmas party and snaps at you when you ask him how he’s doing, while SAQ A is like the uncle with all the presents and all the children running around him and laughing with him as he tells a joke. Ah, SAQ A, we like you a lot.

Anyway – a final note on us, while we can state on PCI side, a full outsourcing of e-commerce payment page to third party qualifies for SAQ A, you do need to think – SAQ A-EP makes sense. The page doing the re-direct could be attacked and compromise and the redirect sent to another ‘payment page’ that looks exactly the same as the actual one. So while you are laughing with SAQ A, you need to take into account not to ignore the reasonable requirements that A-EP puts to you – vulnerability scan, firewall rules, penetration testing – i.e these are all best practice baselines that should be practiced regardless of compliance conditions etc. I would recommend a middle ground and take up a risk approach to it – implement these controls based on a good risk assessment and not just ignore the poor, grumpy SAQ A-EP uncle sitting in the corner. Because he may have a point in terms of security, after all.

Let us know about your experience or questions on PCI, SAQs or any other compliance questions at avantedge@pkfmalaysia.com!

PCI-DSS and Vendors

June 20, 2020 / / 0 Comments

One of the things that advisors and consultants do, as part of our journey to get our clients to comply to PCI-DSS is the inevitable (and unenviable) task of dealing with vendors. A vendor can be classified as anyone or any company that is selling a service or a product to our client, that directly or indirectly relates or affect their PCI-DSS compliance. Examples include firewall vendors, encryption technology vendors, HSM vendors, server vendors, Virtual solution vendors, SIEM vendors, SOC providers, call center solution vendors, telemarketing services, hosting providers, cloud providers and the list goes on. Having dealt with hundreds of vendors over the course of the decade we have come across all kinds: some are understanding, some are hostile, some are dismissive, some are helpful and the list goes on.

But there is always a common denominator in vendors: They all start by justifying why their product or service is:

a) Not relevant to PCI-DSS compliance (because they don’t store card data, usually)

b) Why their product is PCI acceptable (but it’s really not, or when we have questions on certain aspects of it)

It always begins with these two start points and it can then branch off into a myriad of different plots, twists, turns and endings, very much like a prolonged Korean drama.

With this in mind, we recently had an interesting call with one of such vendor, who basically runs a fairly important PCI subsystem for one of our clients. The problem was that their logs and console had two things that we sometimes find: the combination of truncated and hashed values of a credit card information, grouped together.

Now, just a very quick recap:

a) Truncated card data – This is where you see parts of the card replaced by XXXX characters (or any character) where the full card number is not STORED. Now it must be noted that TRUNCATED and MASKED are treated differently, although oftentimes confused and used interchangeably. When we say something is MASKED, it generally means the PAN (Primary account number) is stored in full but not displayed in full on the console/application etc. This applies sometimes to call centers or outsourced services where full PAN is not required for back office operations but for reconciliation or references. TRUNCATED here means even in storage, the full PAN is not present.

b) Hashed Card Data – Hashing means its a one-way transformation of card data into a hash value with no way to reverse it (Unlike encryption). If we use a SHA-256 hash algorithm on a PAN, you get a fixed result. Fraud management systems may store this hash PAN in order to identify transactions by that particular card (after hashing), and not worry about the actual card data being stored. It’s like hashing of passwords where the actual password isn’t known.

It’s to be noted, when done properly, these two instances of data may even be considered entirely out of scope of PCI-DSS. The problem here is when you have both of these stored together and correlated together, it renders the data protection weaker than just having one control available. This is probably where the concept usually gets lost on clients implementing these controls, as we have seen many times before – for example, tokenized information being stored together with truncated values.

Even PCI-DSS itself states clearly in the standard item 3.4 in the Note, that “Where hashed and truncated versions of the same PAN are present in an entity’s environment, additional controls must be in place to ensure that the hashed and truncated versions cannot be correlated to reconstruct the original PAN.”

To clarify, it doesn’t mean that it CANNOT be done, but additional controls must be in place. A further look at this is found in the Tokenization Product Security Guidelines Supplementary document:

IT 1A-3.b: Verify that the coexistence of a truncated PAN and a token does not provide a statistical advantage greater than the probably of correctly guessing the PAN based on the truncated value alone.

Further on:

…then the vendor provides documentation to validate the security strength (see Annex C – Minimum Key Sizes and Equivalent Key Strengths for Cryptographic Primitives) for each respective mechanism. The vendor should provide a truncated PAN and irreversible token sample for each.

And furthermore in Tokenization_Guidelines_Info_Supplement.pdf:

Note: If a token is generated as a result of using a hash function, then it is relatively trivial effort for a malicious individual to reconstruct original PAN data if they have access to both the truncated and hashed version of the PAN. Where hashed and truncated versions of the same PAN are present in the environment, additional controls should be in place to ensure that the hashed and truncated versions cannot be correlated to reconstruct the original PAN.

So in short, at anytime we see there are hashed values and truncated value together, we need to validated further on the controls. A good writeup is found here at another blog which summarises the issues surrounding this.

However, as our call with this particular vendor continued on, he demonstrated just how vendors should or should NOT approach PCI-DSS compliance, which sort of inspired this post:

A) DON’T place yourself as the topical expert in PCI-DSS: Don’t. Not because you are not, but because you are representing a product or a service, so you always view certain things through a lense you have been trained on. I know, because I was with vendors for many years and most of our consultants are from vendor backgrounds. He immediately started by stating, he is extremely well verse with section 3.4 of PCI-DSS (which basically talks about the 4 options of protecting card holder data stored), and that he has gone through this conversation many times with consultants. This immediately sends the QSA red flags, once the vendor starts moving away from what they know (their product) to what they may think they know but generally may not (PCI-DSS), and in general we don’t want to put the auditor on defence once vendors sound defensive. It should be collaborative. DO state clearly that we are subject matter experts in our own field and we are open to discussions.

B) DON’T recover by going ‘technical’: In his eagerness to demonstrate his opinion on PCI, he insisted that we all should know what 3.4 is about. Concerning the four controls stated in PCI-DSS (token, truncation, hashing, encryption), he claimed that their product is superior to what we are used to because his product has implemented 3 out of 4 of these controls (hashing, truncation and encryption) and he claims this makes it even more compliant to PCI-DSS. At this point, someone is going to call you out, which is what we did reluctantly as we were all staring at each other quizzically. We had to emphasize we really can’t bring this to the auditor or justify this to our client who was also on the call, as this is an absolute misinterpretation of PCI-DSS, no matter what angle you spin. PCI never told us to implement as many of these options as possible. In fact, clearly stating if more than one of these are introduced, extra care must be taken in terms of controls that these cannot be correlated back to the PAN. We told him this was a clear misinterpretation to which his response was going into a long discourse of where we consultants were always ‘harping’ on impractical suggestions of security and where we always think it’s easy to crack hashes just because we know a little bit about ‘rainbow tables’. We call this “going technical”. As Herman Melville, the dude that wrote Moby Dick puts it:

“A man of true Science uses but few hard words and those only when none others will serve his purpose; whereas the smatterer in Science… thinks that by mouthing hard words he understands hard things”. – Dude that wrote Moby Dick.

Our job is really to uncomplicate things and not to make it sound MORE complicated, because there may always be someone in the room (or video conference) who knows a little more than what they let on.

DO avoid jargonizing the entire conversation as it is very awkward for everyone, especially for those who really know the subject. DO allow input from others and see from the point of view of the standard, whether you agree or disagree or not and keep in mind the goal is common: to make our client compliant.


C) DO find a solution together. As a vendor, we must remember, the team is with the client. The consultant is (usually) with the client. So its the same team. A good consultant will always want vendors to work together. We always try to work out an understanding if vendors cannot implement certain things, then let’s see what we can work on, and we can then talk to the the QSA and reason things out. Compensating controls etc. So the solution needs to be together, and finally, after all those awkward moments of mansplaining everything to us, we just went: “OK, let’s move on, these are the limitations, let’s see where the solution is.” And after around 5 minutes or so, we had a workaround sorted out. Done. No need to fuss. So next step is to get this workaround passed by the auditor for this round and if not, then we are back again to discuss, if yes, then done, everyone is moving out to other issues. Time is of essence, and the last thing we need is each of us trying to show the size of our brains to each other.

D) Don’t namedrop and look for shorter ways to resolve issues. One of the weirdest thing that was said in the conversation after all our solution discussion was when the vendor said that he knew who the QSA was and he dropped a few names and said, just tell the QSA it’s so and so, and we’ve worked together and he will understand. Firstly, it doesn’t work like that. Namedropping doesn’t allow you to pass PCI. Secondly, no matter how long you have worked with someone, remember, another guy in the room may know that someone longer than you. We’ve been working with the QSA since the day they were not even in the country and for a decade, so we know everyone there. If namedropping was going to pass PCI, we would be passing PCI to every Tom, Dick, Harry and Sally around the world. No, it doesn’t work that way, we need to resolve the issues.

So there you have it. This may sound like a rant, but the end of the conversation was actually somewhat amicable. Firstly, I was genuinely appreciative of the time he gave us. Some vendors don’t even get to the table to talk and the fact that he did, I really think its a good step forward and made our jobs easier. Secondly, we did find the workaround together and that he was willing to even agree to a workaround, that’s a hard battle won. Countless vendors have stood their ground and stubbornly refused to budge even when PCI non-compliance was screaming at their faces. Thirdly, I think, after all the “wayang“, I believe he actually truly believed in helping our client and really thought that his product was actually compliant in all aspects. Of course, his delivery was awkward, but the intention was never to make life difficult for everyone, but to be of assistance.

At the end, the experience was a positive one, given how many discussions with vendors go south. We knew more of their solution, we worked out a solution together and more importantly, we think this will pass PCI for our client. So everyone wins. In this case, the Korean Drama ended well!

For more information on PCI-DSS, drop us a line at pcidss@pkfmalaysia.com and we will get back to you immediately! Stay safe!

PCI-DSS – So Why Aren’t We QSA?

June 29, 2017 / / 0 Comments

We have faced this question many times before over the course of 7 years working on PCI-DSS in this region. Many customers have asked us, why haven’t we become QSA (Qualified Security Assessor), considering the amount of PCI work we have been involved in, as well as the PCI-DSS knowledge that we are having?

The answer is simply – we choose not to.

Don’t get me wrong. QSAs certainly have their place in our world, and the fact that we work closely with one, as well as representing them in our country states the importance of having a solid auditing foundation in every project that we go in.

But here are the main reasons why we have decided that being a QSA would hinder us, rather than assist us:

a) Conflict of Interest

This is a huge reason why we maintain our consulting and implementation practice, while choosing not to become an auditor. Our business is not just PCI-DSS. We have a huge chunk of consulting practices in ISMS (ISO27001), training as well as upcoming compliances like SOC1,2, Personal Data Protection Act etc. QSAs and the question conflict of interest has been around for a long time. It is also addressed in Provision 2.2.2 in the PCI-DSS validation requirements for QSA

The QSA must describe the company’s practices to maintain and assure auditor independence, including, but not limited to, practices, organizational structure/separation, and employee education in place to prevent conflicts of
interest in a variety of scenarios, such as the following:

The QSA customer uses products or applications developed or manufactured by the QSA company.
The QSA customer uses products or applications managed or configured by the QSA company.
The description must include details with respect to compliance with the Specified Independence Requirements called out in Section 2.1 above.

The thing is, we do a fair bit of work for our clients – including development of policies, reviewing their security, implementing policies and logging products etc – because we are good at it. Before PCI, we were operational guys, guiding SOCs and NOCs, troubleshooting routers and switches, deploying firewalls and SIEMs etc. We weren’t bred as auditors from the start, so most of us have an inherent instinct to just go in and get the job done for our clients. Now, the problem is once we do wear the auditor’s hat, there are a lot of grey areas. We make this demarcation very distinct in our IT general Controls audit – the moment we implement something for our client, we cannot audit or assess it. We can’t audit our own work. This is not just for PCI, this goes across the board for anything we do.

PCI gets around this by ensuring that the QSA has proper internal segregation – meaning it is generally accepted that policies be put into place that mandate a separation of duties between QSA Auditors and QSAs, or other individuals within a QSA certified company who provide remediation support. So generally, any QSA company should have its consulting group separated from its audit group. Now, PCI-SSC doesn’t specifically state that QSA Companies cannot provide remediative services – after all, if the QSAs know what it takes to pass PCI-DSS wouldn’t they be the best source of knowledge to clients after all (and they often are) – but QSAs need to be very aware that they cannot push their products or services as the only option for compliance. Customers must have the options on the table, the knowledge that there are other options in order for them to make informed decisions.

It’s made trickier due to our DNA as a CPA company. PKF wasn’t born an IT company or a security firm – our roots are in accounting and auditing, and most of our partners hail from Big 4 (PWC, KPMG, EY, Deloitte) and even ex-AA. In fact, I am the only non-audit guy in the partner table and my jokes are often not understood. Due to this background, inherently we have this default position whereby if there are any grey areas, it’s safer to err on the side of caution and not do it unless proper conditions are clear. So while in PCI the arrangement of QSACs providing remediation works are allowed with certain conditions, the very memory of how an 89 year old accounting firm had to surrender its CPA license due to the largest auditing scandal in history still lives on in our industry.

b) We Hate Auditing

Well not really. We are auditors after all! We do have a fair bit of audit and assessments as part of our work. But boy, have you ever been in an audit as an auditor? Everyone just hates you. I remember auditing for a very large BPO company for their IT general controls and software development. The head of software looked like he was going to put live electric eels down our pants halfway through our interview. And we weren’t even antagonistic. Asking for documentation of his software practices was like asking for the what Edward Snowden had. Another company had their head of operations sit with us in the room for 1 hour and throughout the entire session, he refused to answer anything without legal in the same room. It was like we were interrogating him for murder instead of just asking if he had a change management procedure. It’s not all like this of course, we do have excellent clients who are on the same page as us mostly and we do feel the whole auditing process is enriching to our professional lives. Really. Even with that, the follow up audits, the report writing and quality assurance process etc, the evidence gathering and formatting into the proper report, the cycle of obtaining management comments etc. It’s just very taxing on the guys. Report writing takes up a chunk. And guess what – in PCI, a normal Report on Compliance (ROC) for level 1 onsite assessments can stretch up to a thousand pages. Yes. A. Thousand. Or more. It’s like asking us to become Leo Tolstoy and start writing War and Peace every single assignment.

c) Cost vs Benefit

Being a QSA is a great achievement. But there is a huge outlay for the company as well. Not only there are fees you need to pay to become QSA, there are fees you need to pay to operate in particular regions as well. Then you have training fees for your QSAs, yearly maintenance etc. It’s a lot of money to run a QSA company and because of that, you need to get your bacon from all over. For instance, if you have license in Asia-Pacific, then you probably want to tackle the China market. Or else, focus on the SEA region and get your QSAs to fly between countries. Focusing on a single country isn’t going to make up for the cost of maintaining your QSA company, at least from our point of view and our brief calculations. Now because of this, we need to fan out. To fan out, we need to expand the company. To expand, we need to hire and get jobs. I’m all for it, but its a matter of being a big fish in a small pond or a small fish in a big pond. As of this moment, our strategy is not to overstretch ourselves too much and to establish ourselves with the clients we have. It’s not as if PKF is in a hurry to IPO or go anywhere. We’re here for the long run, and in Standard Chartered slogan: We are here for good.

d) Stretching is not fun

We tried it before.

As in not physically, but in terms of a company. We grew our tiny little professional services firm to 16 people once upon a time, with dedicated R&D and Project Management group only to get kicked in the butt by a guy called “No Jobs”. We grew so fast, we didn’t get the sales in to keep up and after the initial projects were done, we were left with a lot of people on the bench playing Pokemon-go. We stretched. But we over did it. It’s not to say we are now not being ambitious. We still are, but we need to be realistic with our goals. If we target to get 10 – 15 tier one customers to keep our benefit more than our cost – how many QSAs do we need to do that? After that, how many consultants to do the remediation work?

Additionally, even if we had 10 QSAs for instance, these guys will be scrambling all over the region doing audits. They won’t have time for operational work. They won’t have time for consulting or providing technical services. They will either be auditing a customer, or they will be on a plane somewhere, or they will be writing or reviewing one of those 1000 pages tomes called the ROC.

e) We Want to Stick with our Customers

The bottom line is this. If we hadn’t found a trusted QSA whom we can work with and who are mostly on the same page as us, we would have gone and gotten our QSA ourselves and went another direction. I think we have enough legs and enough entrenchment in the region and global to do that. But we found a great partner. We found a QSA that we could work with and didn’t do any BS work. We found a QSA that had similar philosophies (although we are still working in synching our concept of deadlines, but hey, that’s like marriage, ain’t it) – and for 7 years, we have been working great together. They like what we do, that they can hands off a lot of the remediation advisory to us and don’t have to get on conference calls all the time or have to fly in and out of our client’s offices for weekly meetings. We like that we can work with our customer, look after our client’s interest and not worry to much about whether we are overstepping our limits as advisors or consultants versus auditors. We can stick with our customers and give them all we have. We can spend a whole day in our customer’s premise working with them without worrying that we need to head off for an audit for 2 weeks in Timbaktu. We don’t have to fly in and out of countries or tell our clients we can only meet 2 weeks later. If you want us within 24 hours, we will have someone there. Best of all, it’s very clear that once auditing starts, we are sitting on the side of our client, and ensuring that our client have what it takes to pass PCI-DSS.

Of course, this is simply our view at this current time. We are well aware of the flowing and ebbing of different forces in our industry and it might come a time whereby this model doesn’t work anymore. But for now, honestly, we just want to get cracking at troubleshooting your Cisco ASA as opposed to writing a War and Peace Novel. Drop us a note at pcidss@pkfmalaysia.com for more information!

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