Microsoft's July 2017 Patch Tuesday includes a fix for an issue with the NT LAN Manager (NTLM) Authentication Protocol that can be exploited to allow attackers to create admin accounts on a local network's domain controller (DC).

The issue was discovered by three Preempt researchers and can be exploited because some of the authentication methods supported by Windows via the Windows Authentication API (SSPI) allow an attacker to downgrade the authentication system back to NTLM, a protocol that shipped for the first time in 1995 with Windows NT 3.51.

NTLM relay attack allows creation of DC admin accounts

At its heart, the attack Preempt researchers discovered is an NTLM relay attack. These types of attacks have been known to exist for well over a decade, and rely on a user connecting to an infected computer. This computer is usually infected with malware and takes NTLM credentials and relays them to a third-party or uses them to perform malicious actions on the connecting user's behalf, but without his knowledge.

This is exactly what the Preempt team discovered. In a blog post published today, and in a YouTube video below, researchers said they could downgrade LDAP authentication attempt against an infected server down to NTLM, and forward authentication and session information to an attacker.

The attacker could then use these credentials to create his own admin account on the local network's domain controller, effectively taking over that network.

For LDAP operations, the attack works even if the user connecting to the infected server is using LDAP server signing, a security system that digitally signs every LDAP session with a unique key.

The Preempt attack is tracked as CVE-2017-8563, and Microsoft issues patches via the following KB articles: 4025331, 4025333, 4025336, 4025337, 4025338, 4025339, 4025341, 4025342, 4025343, 4025344, and 4025409.

Attack variation bypasses RDP Restricted-Admin

Last but not least, researchers also discovered a variation of this attack that works for RDP connections to infected computers.

This attack bypasses RDP Restricted-Admin, the so-called RDP Safe Mode connection type that IT technicians use to connect to infected PCs.

Just like the original LDAP attack, attackers downgraded the RDP connection to NTLM and later created a rogue admin account on the local domain controller.

Microsoft said this was a known issue, but did not release a fix.