In this paper, we employ the Communicating finite state machine (CFSM) model for networks to investigate fault identification using passive testing. First, we introduce the concept of passive testing. Then, we introduce the CFSM model and the observer model with necessary assumptions and justification. We introduce the fault model and the fault detection algorithm using passive testing. Extending our previous work, we develop the new approach for fault identification based on the CFSM model. A 2-node model example is given to illustrate our approach. Then, we illustrate the effectiveness of our new technique through simulation of practical protocol examples, covering both the 2-node and 3-node models. Finally future extensions and potential trends are discussed. (Cross-referenced as UMIACS-TR-2001-28)