First, the good news: The past year has witnessed the decimation of spam volume, the arrests of several key hackers, and the high-profile takedowns of some of the Web’s most notorious botnets. The bad news? The crooks behind these huge crime machines are fighting back — devising new approaches designed to resist even the most energetic takedown efforts.

The volume of junk email flooding inboxes each day is way down from a year ago, as much as a 90 percent decrease according to some estimates. Symantec reports that spam volumes hit their high mark in July 2010, when junk email purveyors were blasting in excess of 225 billion spam messages per day. The company says daily spam volumes now hover between 25 and 50 billion missives daily. Anti-spam experts from Cisco Systems are tracking a similarly precipitous decline, from 300 billion per day in June 2010 to just 40 billion in June 2011.

There may be many reasons for the drop in junk email volumes, but it would be a mistake to downplay efforts by law enforcement officials and security experts. In the past year, authorities have taken down some of the biggest botnets and apprehended several top botmasters. Most recently, the FBI worked with dozens of ISPs to kneecap the Coreflood botnet. In April, Microsoft launched an apparently successful sneak attack against Rustock, a botnet once responsible for sending 40 percent of all junk email.

In December 2010, the FBI arrested a Russian accused of running the Mega-D botnet. In October 2010, authorities in the Netherlands arrested the alleged creator of the Bredolab botnet and dismantled huge chunks of the botnet. A month earlier, Spamit.com, one of the biggest spammer affiliate programs ever created, was shut down when its creator, Igor Gusev, was named the world’s number one spammer and went into hiding. In August 2010, researchers clobbered the Pushdo botnet, causing spam from that botnet to slow to a trickle.

But botmasters are not idly standing by while their industry is dismantled. Analysts from Kaspersky Lab this week published research on a new version of the TDSS malware (a.k.a. TDL), a sophisticated malicious code family that includes a powerful rootkit component that compromises PCs below the operating system level, making it extremely challenging to detect and remove. The latest version of TDSS — dubbed TDL-4 — has already infected 4.5 million PCs; it uses a custom encryption scheme that makes it difficult for security experts to analyze traffic between hijacked PCs and botnet controllers. TDL-4 control networks also send out instructions to infected PCs using a peer-to-peer network that includes multiple failsafe mechanisms.

Getting infected with TDL-4 may not be such a raw deal if your computer is already heavily infected with other malware: According to Kaspersky, the bot will remove threats like the ZeuS Trojan and 20 other malicious bot programs from host PCs. “TDSS scans the registry, searches for specific file names, blacklists the addresses of the command and control centers of other botnets and prevents victim machines from contacting them,” wrote Kaspersky analysts Sergey Golovanov and Igor Soumenkov.

The evolution of the TDL-4 bot is part of the cat-and-mouse game played by miscreants and those who seek to thwart their efforts. But law enforcement agencies and security experts also are evolving by sharing more information and working in concert, said Alex Lanstein, a senior security researcher at FireEye, a company that has played a key role in several coordinated botnet takedowns in the past two years.

“Takedowns can have an effect of temporarily providing relief from general badness, be it click fraud, spam, or credential theft, but lasting takedowns can only be achieved by putting criminals in silver bracelets,” Lanstein said. “The Mega-D takedown, for example, was accomplished through trust relationships with registrars, but the lasting takedown was accomplished by arresting the alleged author, who is awaiting trial. In the interim, security companies are getting better and better about working with law enforcement, which is what happened with Rustock.”

Attacking the botnet infrastructure and pursuing botmasters are crucial components of any anti-cybercrime strategy: TDSS, for example, is believed to be tied to affiliate programs that pay hackers to distribute malware.

Unfortunately, not many security experts or law enforcement agencies say they are focusing attention on another major weapon in battling e-crime: Targeting the financial instruments used by these criminal organizations.

Some of the best research on the financial side of the cybercrime underworld is coming from academia, and there are signs that researchers are beginning to share information about individuals and financial institutions that are facilitating the frauds. Recent studies of the pay-per-install, rogue anti-virus and online pharmacy industries reveal a broad overlap of banks and processors that have staked a claim in the market for handling these high-risk transactions. Earlier this week I published data suggesting that the market for rogue pharmaceuticals could be squashed if banks and credit card companies paid closer attention to transactions destined for a handful of credit and debit card processors. Next week, I will publish the first in a series of blog posts that look at the connections between the financial instruments used by rogue Internet pharmacies and those of the affiliate networks that push rogue anti-virus or “scareware.”

Tags: Alex Lanstein, botnets, Bredolab, Cisco Systems, Coreflood, FireEye, Igor Gusev, Igor Soumenkov, Kaspersky Lab, Mega-D, microsoft, Pushdo, Rustock, Sergey Golovanov, spam, spamcop, spamit.com, Symantec, tdss, TLD-4