What is NYDFS?
The New York Department of Financial Services (NYDFS) CyberSecurity Regulation, also known as NYCRR Part 500, goal is to protect confidentiality, integrity and availability of financial institutions’ information systems and nonpublic information. It has strict rules about data protection and requirements for incident reporting. There are especially harsh consequences for non-compliance including substantial fines, reputational damage, and, in severe cases, loss of license.
It’s no wonder that New York companies that are beholden to the regulation choose Trustero as the AI Intelligence layer to provide continuous analysis of their GRC data, telling them if there are any gaps in compliance and giving tailored advice on how to close them quickly, almost like a human expert.
With NYDFS framework requiring annual certifications of compliance and detailed documentation of cybersecurity programs, Trustero provides organizations with the confidence and tools to certify compliance accurately and efficiently. Trustero AI is able to analyze and understand nuanced GRC data in real time and compare it to your controls and frameworks in ways that traditional GRC management platforms cannot. So, many major financial institutions and other heavily regulated businesses choose to add Trustero to their compliance stack to complement the traditional GRC management platforms.
About the NYDFS Cybersecurity Regulation
The New York Department of Financial Services (NYDFS) Cybersecurity Regulation, codified as 23 NYCRR Part 500, establishes comprehensive cybersecurity requirements for financial services companies operating under NYDFS jurisdiction. Effective since March 1, 2017, with amendments as recent as November 1, 2023, the regulation aims to protect consumers and ensure the safety and soundness of the financial services industry.
Entities Most Affected:
The regulation applies to a broad range of entities within the financial services sector, including:
- Banks and Credit Unions
- Insurance Companies
- Payment Institutions
- Electronic Money Institutions
- Other Financial Service Providers chartered, licensed, or approved by NYDFS
Additionally, larger financial institutions designated as Class A companies, with over 2,000 employees or over $1 billion in gross annual revenue, face more stringent requirements due to their significant operational and technological footprint.
Key Requirements:
- Cybersecurity Program and Policy: Covered entities must implement a robust cybersecurity program and maintain a written policy approved by senior management or the board of directors.
Department of Financial Services - Chief Information Security Officer (CISO): Appointment of a qualified CISO responsible for overseeing and implementing the cybersecurity program is mandatory.
Department of Financial Services - Risk Assessments: Periodic risk assessments are required to inform the design of the cybersecurity program, ensuring it addresses identified risks effectively.
Department of Financial Services - Penetration Testing and Vulnerability Assessments: Regular testing to assess the effectiveness of the cybersecurity program is mandated.
Department of Financial Services - Multi-Factor Authentication (MFA): Implementation of MFA for any individual accessing internal networks from an external network is required.
Department of Financial Services - Third-Party Service Provider Security Policy: Policies must be in place to ensure the security of Information Systems and Nonpublic Information accessible to or held by third-party service providers.
Department of Financial Services
Practical Tip:
Using an AI-powered platform like Trustero enables organizations to harmonize compliance efforts across multiple frameworks. By mapping controls and evidence to overlapping requirements, companies can streamline audits, reduce redundant tasks, and respond more quickly to incidents—no matter which regulation is triggered.
Challenging Aspects:
- Data Encryption: Organizations are required to enact controls, including encryption of sensitive data, depending on the outcome of a risk assessment.
- Annual Certification: Covered entities must complete certification every year to confirm compliance with the regulations.
- Enhanced Multi-Factor Authentication: Covered institutions must employ multi-factor authentication for all inbound connections to the entity's network.
- Incident Reporting: Covered entities must document and report all cybersecurity events.
Best Practices:
- Assemble a Regulatory Compliance Team: Assign a qualified CISO and establish a team to manage compliance efforts.
- Understand and Manage Your Risk Profile: Conduct ongoing, periodic risk assessments to identify risk drivers and emerging threats. Ensure proper risk management and oversight
- Adhere to Deadlines: Ensure timely compliance with all regulatory deadlines to avoid penalties.
- Implement Continuous Monitoring: Establish systems to detect, on an ongoing basis, changes in Information Systems that may create or indicate vulnerabilities.
- Have a robust, regularly tested Incident Response Process: Consider the stringent reporting requirement and ever-changing environment, perform regular testing of the process and continuously improve it
Specifically, how does Trustero help with NYDFS?
- Continuous Control Monitoring for Operating Effectiveness: Trustero's Control Assurance feature enables continuous monitoring of control operating effectiveness, ensuring compliance gaps are detected in real time. This is critical for NYDFS compliance, as organizations must demonstrate the ability to identify and mitigate security-related issues in a timely manner.
- Gap Analysis, Evaluation, and Testing: Trustero AI evaluates compliance controls against NYDFS requirements, identifying areas of non-compliance. It provides actionable remediation guidance, tailored to the specific control gaps and policies in place just like a human auditor, in a fraction of the time. This functionality helps organizations not only identify but also quickly resolve gaps before they escalate into reportable incidents. This continuous design evaluation is especially helpful for businesses that operation in highly dynamic environments - both internal and external
- Comprehensive Evidence Collection and Mapping: Trustero AI automatically collects and organizes evidence from various systems, mapping it to the relevant NYDFS requirements. This capability is backed by Trustero’s Trust Graph, which ensures only the most accurate and relevant data is used. This simplifies the process of demonstrating compliance to regulators during audits or incident investigations, reducing the administrative burden on compliance and other teams.
- Incident Response Readiness: Trustero’s ability to provide real-time operational intelligence and AI-driven compliance support a comprehensive Incident Response Plan required by the NYDFS. This helps organizations meet the stringent reporting timelines for cybersecurity events (e.g., 72-hour notice to NYDFS) with comprehensive documentation and analysis.
- Regulatory Framework Support: Trustero supports hundreds of regulatory frameworks, including NYDFS. Its framework-agnostic nature means organizations can adapt to evolving NYDFS requirements without needing extensive reconfiguration. Organizations can maintain compliance across multiple frameworks, including highly customized controls, while streamlining their processes, avoiding costly errors or oversights.
- Advanced Reporting and Auditor Self-Service: Trustero provides detailed reporting capabilities that align with NYDFS requirements. Auditors can self-serve, using Trustero’s platform to access necessary data and evidence without additional input from the organization. This reduces the manual effort required during audits and improves transparency with NYDFS regulators.
By delivering detailed continous monitoring, automated gap analysis, and comprehensive evidence mapping, Trustero empowers organizations to meet the high standards of NYDFS compliance while reducing the operational overhead and risks associated with manual processes.