Amusingly named 3rd party
anti-cheat software developed for Valve Software
engine. At the time of this writing in an early stage of development, but fleshed out enough to be in active use.
Anti-cheating systems are, roughly speaking, like software copy protection; impossible to maintain when taken to their logical conclusion; it's really just a question of making it difficult enough that a hacker will give up and move on. The software author puts a consistency check in, the hacker short-circuits it, the author puts a check in for the check, that's short-circuited too, ad infinitim.
The punkbuster model involves a three point architecture; the first point of which involves running a separate client on the player's machine. This client is interrogated by the game server (the second point, which has been patched with punkbuster code), which refers it to the third point, the punkbuster master server. This master server and the player's client then begin to communicate. The master server transmits a block of code to the client containing the latest round of detection routines, which basically search the player's computer for cheats. The punkbuster client then certifies the player's computer cheat-free - or not - to the master server, which relays this conclusion to the game server.
There is a layer of cryptography over all of this; as near as I can tell, it involves a variation on the standard "I'm not cheating" message from the client to the master server (the forging of which is the easiest way to break such a system); it's signed and/or encrypted. Obviously, all the punk would need to do is disassemble the client, find the keys, and sign their own fake messages, but according to the FAQ: "However, the client/server approach affords PunkBuster huge advantages over other methods because the authentication keys are never stored on users' computers. Additionally, we hope and believe that by providing timely, automatic, and seamless update patches to the PunkBuster client and server software, that the majority of organized cheat dissemination efforts will be thwarted." Well, this can't be literally true, but it implies an interesting approach.
Well, good luck, guys.