German Police Writing Eavesdropping Malware?

Graham Cluley of Sophos:

Sophos’s analysis of the malware confirms that it has the following functionality:
The Trojan can eavesdrop on several communication applications - including Skype, MSN Messenger and Yahoo Messenger.

The Trojan can log keystrokes in Firefox, Opera, Internet Explorer and SeaMonkey.

The Trojan can take JPEG screenshots of what appears on users’ screens and record Skype audio calls.

The Trojan attempts to communicate with a remote website.

Sounds like German authorities are overstepping their bounds. While I certainly have no intimate knowledge of German law, I find it hard to believe this is permissible under their wiretapping statutes - which were written during the telephone era - or any other laws.

While there are surely some intelligence related statutes permitting certain types of activity, it is highly dubious to think these techniques would be allowed to target average citizens. Although, three-letter U.S. agencies never let something like legalities or the constitution ever get in the way of spying on their own citizens.