In the modern era of technology, security is a major concern for governments, businesses, banks, and educational institutes. With an increase in the use of digital platforms, more and more businesses and organizations are making strong digital appearances. There is hardly any organization that is not using technology these days. Therefore, there is a great need for strong and reliable security services. Here, NYDFS plays a major role. It alleviates the risk of data theft or data leakage.  


What is NYDFS? 

NYDFS stands for The New York Department for Financial Services. In New York, all financial institutions including insurance companies and banks are regulated by NYDFS to evaluate their cybersecurity risk status. The NYDFS Cybersecurity Regulation comprises a set of regulations issued by the department. There are 23 sections included in the rules made to implement cybersecurity effectively. All the organizations registered under it must have to implement more powerful policies and authorities.  


Who is covered under NYDFS Regulation? 

NYDFS Cybersecurity Regulation applies to all persons and entities operating under license, registration, certificate, permit, or accreditation under Banking Law, Financial Law, and Insurance Law in New York.


The list of entities covered under NYDFS includes: 

  • State-chartered banks 
  • Insurance companies 
  • Trust companies 
  • Mortgage firms 
  • Service providers 
  • Foreign Banks operating in the United States
  • Private bankers 
  • Licensed lenders 
  • Any third-party service providers 


Major Goals of NYDFS Cybersecurity Regulation 

As discussed above, this cybersecurity regulation was issued to combat cyber threats and strengthen cyber security. It applies to all the financial institutions working in the United States. The major goal of the regulation is to guarantee the safeguarding of sophisticated customer data and to integrate information technology systems of registered entities. Therefore, it aims to protect sensitive information that is prone to theft.

How does NYDFS 500 Cybersecurity Regulation work? 

NYDFS has well-defined rules to impose strict cybersecurity rules in the United States. It applies to all entities and individuals seeking a license from NYDFS. All of them need to develop a cybersecurity policy that will include any data breach incident to be notified to the department within 72 hours. There is a great responsibility on the senior members of management of an institution or organization to timely assess the risk profiles and to design cybersecurity programs to tackle or prevent that threat. It will also cover the following standards. 

  • System security & network security 
  • Quality assurance during application and system development 
  • Capacity check and planned performance 
  • Timely and regular risk assessment to prevent future risk
  • Recovery plans to recover disasters if any occur 
  • Ensure the security of information systems and operations 
  • Customer information and data security 


Who is exempted or given relaxation under NYDFS?  

As we discussed, all financial institutions must have to be registered under compliance. However, there is little exemption provided to the following entities based on defined parameters.

  • All those who are working with less than 10 employees are exempted. 
  • Firms producing less than $5 million in gross annual revenue from their New York operations. 
  • All those charitable organizations/foreign risk groups which are operating in New York. 
  • The companies that have total assets less than $10 million at the year-end.

Major provisions listed in the 23 NYCRR 500 regulatory standards 

There are 23 sessions defined in the regulation act that are made to prevent data breaches or to secure an organization’s private data. The following provisions are refined in the regulation. 


 Establish a Cyber Security Program (Section 500.02) 

This section defines that all the organizations covered under NYDFScompliance must establish a cybersecurity program. There will be a periodic risk assessment and monitoring to diagnose and prevent risk. It will be aimed at the protection of information systems and customers’ data. If the Superintendent of Financial Services requests documents related to the program, the entities have to make them available. 


Implement & maintain Cybersecurity Policy(Section 500.03) 

The covered entities must have to implement and maintain written policies that are approved by the firm’s cyber security expert or board of directors. The policy will cover risk assessment and address the entity to implement required operations. 


Appoint a Chief Information Security Officer (Section 500.04) 

The entities must appoint a Chief Information Security Officer(CISO). He must have expertise in cybersecurity risk management. It will be the responsibility of the CISO to implement the cybersecurity regulations in the organization. The higher authority will get a security update from the chief information security officer. 


Penetration Testing & Vulnerability Management (Section 500.05) 

Penetration Testing is the key to determining how cybersecurity can be put at risk by cybercriminals and creating a strong strategy to tackle or prevent it.  


Audit Trail (Section 500.06) 

Auditing is a crucial aspect of cyber security. A proper and timely cybersecurity audit can help to foresee potential risk factors and threats that could be vulnerable to your company. The cybersecurity expert must be updated with the latest evolution in cybersecurity and the techniques associated with it. 


Access Privileges (500.07) 

Entities registered under cybersecurity programs must limit user access privileges to the Information systems and all such privileges must be checked and reviewed periodically. 


Risk Assessment (500.09) 

Entities should create a document of bi-annual and periodic assessments to evaluate threats and control measures taken by the entity. It must also allow the revision of controls following the latest technological developments.  


Cybersecurity personnel and Intelligence(500.10) 

Each entity should utilize qualified cybersecurity personnel, an affiliate, or hire a third-party service provider to manage entities’ cyber security risk. The cyber security personnel must be provided with the required training to deal with cyber security risks. 


Multi-factor authentication (500.12) 

To manage cyber risk, entities should use effective control including multi-factor authentication to safeguard unauthorized access from cyber attackers or any individual accessing the entity’s system from outside. 


Incident Response Plan (500.16) 

 As a part of the cybersecurity program, the covered entities shall present a response plan that is designed to respond and recover if any cybersecurity threat takes place.  


The Bottom Line 

Cybersecurity is pivotal to maintaining data security these days. Therefore, 23 NYCRR 500 compliance plays a major role. Non-compliance with the program can have devastating effects on the entities. Also, those entities have to bear fines and penalties of $250,000 or one percent of banking assets along with the risk of a data breach.  


Get NYDFS Part 500 compliant with RiskQ now! 

You must be able to demonstrate compliance with New York State Department of Financial Services Regulatory requirements and respond accordingly. RiskQ makes this simple with our automated solutions and reporting. 

RiskQ is a next generation cyber risk quantification platform assisting entities to maintain cyber security. RiskQ’s NYSDFS PART 500 compliance solution will save your team months of research time and thousands of dollars in consulting fees. 

Thousands of organizations select RiskQ to save time, money, and effort. 




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