Covert channels are of two types: (a) timing channel and (b) storage channel. Most previous works have studied these channels from the encoder’s perspective, namely, information theoretic capacity, algorithms and protocols for hiding information etc. This paper investigates the covert channel problem from an passive adversary's perspective. A sequential distinguisher for storage channel identification by an adversary is proposed and its properties are derived analytically. The impact of correlation in the observations received by the adversary is studied analytically as well as numerically.