NYCRR 500: Regulations to Protect Your Business from Cyberattacks

In recent years, the New York Department of Financial Services has been monitoring cybersecurity risks due to the vulnerable state infrastructure.

Cybercriminals are exploiting the sensitive data of both government departments and private organizations. These cyberattacks result in massive financial losses for the affected entities.

Financial organizations are said to be the prime target of cybercriminals, and many companies are undertaking the development of cybersecurity regulations to prevent these attacks and save sensitive data from leakage. 

The advancement of technology has allowed criminals to find new ways to perform organized crimes.

Even the safest banking and financial organizations are prone to these attacks, so the need is to introduce regulations to prevent such attacks.

These concerns forced the Department of Financial Services in the State of New York to introduce regulatory measures that help prevent cyberattacks.

As a result, organizations need vulnerability assessments so that they can comply with government standards.

What is NYCRR 500?

After rounds of discussion and deliberation with the public and private stakeholders, the Department of Financial Services of the State of New York introduced a set of regulations for public and private organizations. 

In February 2017, NYCRR, commonly known as NYS DFS Part 500 or 23 NYCRR Part 500, was introduced. 

These regulations aimed to establish cybersecurity requirements for organizations, especially those dealing with financial services, to protect nonpublic information. 

Two main principles of these regulations include:

  • The provision of minimum standards for the prevention of cyberattacks
  • Strengthening governance in the field of vulnerable cybersecurity.

Whether small-time brokers or the most complex international banking and insurance companies, nearly all the institutions fall under the NYCRR Part 500 scope.

Any organization that is chartered, licensed, and approved to operate in the state of New York is required to make its information system safe by complying with the cybersecurity requirements introduced by the Department of Financial Services.

The NYCRR 500 roadmap is part of this effort. It’s a step in the right direction toward preventing future attacks on our infrastructure—and it sets us up for success in the future.

The roadmap is focused on five key areas:

  • Education
  • Awareness and training
  • Risk assessments
  • Reporting 
  • Accountability

Education and awareness of the need to comply with regulations have been the key focus of our education efforts in recent years.

Risk assessment is another area where there is scope for improvement in compliance systems.

Understanding NYDFS 500.06

NYDFS 500.06 is a set of rules requiring covered entities to establish, maintain, update, and follow written incident response plans, including procedures to address cybersecurity risks and vulnerabilities.

The plans must be approved by the Chief Information Security Officer (CISO) and maintained in accordance with the NYSDFS’s regulatory requirements governing information security programs and procedures.

NYDFS 500.06(c) requires organizations to implement multi-factor authentication to access all cloud-based applications when utilizing public cloud computing services like Amazon Web Services (AWS).

NYDFS Cybersecurity Checklist

To make your cybersecurity experience easier, here is the checklist of the NYDFS cybersecurity program.

The NYDFS cybersecurity checklist is the only way to ensure your business is secure.

 It’s also necessary to educate yourself about the potential risks and vulnerabilities in your environment and have a plan in place if anything goes wrong.

The 23 NYCRR 500 checklist covers several areas that an organization may go through to obtain the certification of compliance and ensure that their businesses are secure from threats. 

Following is the 23 NYCRR 500 checklist:

Define the problem

Before you begin a cybersecurity plan, it’s essential to define the problem. What are you trying to accomplish? This can be as simple as “I want my employees’ computers to be secure and not hacked” or “I want our network infrastructure protected from attacks.”

Set goals that matter

Once you’ve defined the problem, set reasonable goals for yourself. Even if these aren’t related directly to cybersecurity (for example, if they’re related only tangentially), make sure they still relate back! The goal should be something measurable and achievable in a reasonable timeframe.

  1.  Chief Information Security Officer

The CISO is responsible for implementing and maintaining cybersecurity policies, procedures, and standards.

What does a CISO do?

A CISO’s responsibilities should include the following:

  • Preparing an annual cybersecurity plan for short-term (i.e., one year) and long-term goals regarding the company’s information security program.
  • Develop an organizational structure so that all employees understand their roles in protecting against cyber threats.
  • Making sure that employees know how to identify risks before they become problems.
  • Ensuring compliance with applicable laws, regulations, industry standards, and best practices related to protecting against unauthorized access or misuse by third parties.
  • Working with external partners who specialize in specific areas such as penetration testing or vulnerability assessments.

Penetration Testing and Vulnerability Management

Penetration testing is an assessment of the security of an information system through the use of a simulated attack. Penetration testing involves a hacker or “penetrator” attempting to exploit vulnerabilities within your organization’s network, web application, or database.

Penetration testing can be performed by an external consultant who provides services on behalf of your company, or it may be done internally by someone with experience in penetration testing and security engineering. There are many types of penetration tests; some focus more on determining how secure your systems are based on known vulnerabilities, while others focus on assessing unknown vulnerabilities rather than simply finding them firsthand.

Audit Trail

An audit trail is a series of events that show how an organization has used its assets and information.

The most common types of audit trails include:

  • Log files: These contain data about what applications have been run and when they were run, and who ran them (e.g., hackers). They help determine whether hackers have gained access to your systems or not.
  • Rules-based log analysis tools: These can be used to look at logs from multiple locations at once, which makes it easier for security teams to identify suspicious activity quickly without having to review every file individually and manually.

23 NYCRR Risk Assessments

23 NYCRR Risk assessments are a key part of a cybersecurity regulation under 23 NYCRR 500. They should be performed at least annually and include a review of the company’s cybersecurity program and its processes for monitoring threats.

23 NYCRR Risk assessments can be performed by an internal team or external consultants with expertise in risk analysis and management. The independent party conducting the assessment should have experience working with financial services firms (and/or other industries) and know how these organizations operate their information technology systems.

Cybersecurity Personnel and Intelligence

The first step in securing your organization’s cybersecurity is to ensure that you have the right people doing the job. A CISO will oversee all aspects of information security, including governance, compliance, risk management, and incident response. The CISO should also report directly to the board of directors and CEO, and other senior executives within your company. 

Multi-Factor Authentication

Multi-factor authentication (MFA) is an extra layer of security that requires users to enter information in addition to their passwords. 

Training and Monitoring

  • Training: Training is a key component of any cybersecurity program. It should be ongoing and relevant, including training on how to identify incidents or vulnerabilities and how to respond to them.
  • Monitoring: Monitoring provides the context for your cybersecurity efforts by helping you know whether your employees are learning what they need to learn in order for them to perform their jobs effectively.

Encryption of Nonpublic Information

  • Encryption is a requirement of the NYDFS. The rule says that data in transit or at rest must be encrypted to meet the standard for protecting nonpublic information. This means you must use encryption when moving your data across networks, storing it on devices like laptops and desktops, or sending it via email or cloud services like Dropbox.
  • Encryption can also be used to protect data at rest within your organization; for example, by encrypting files stored on disk drives or servers (in addition to those being transmitted) while they’re in transit between different locations within an organization’s network infrastructure. In other words, if you have sensitive data stored on any device connected to an open network- whether owned by you or not- you’ll need some form of encryption protection around those assets too!

NYDFS Regulations

NYDFS Regulations aim to regulate banks, insurance companies, other financial institutions, money transmitters, and virtual currency firms.

Under these regulations:

  • A firm must obtain a license to engage in activities regulated by NYDFS.
  • The NYDFS has defined four types of licenses: “Banking,” “Mortgage Lending,” “Insurance Sales,” and “General Business.”

Certain financial and nonfinancial companies are exempt from the NYDFS licensing requirement.

These include:

  • Nonfinancial companies that are not engaged in the business of conducting securities, commodity futures, or options trading;
  • Private equity funds, venture capital funds, and hedge funds.

The NYDFS has the authority to regulate certain transactions involving securities, commodities, or other products.

Changes made during the public comment period must be reflected in the final rule before it becomes effective.

The NYDFS has made changes to its existing regulations during the public comment period. As a result, those changes must be reflected in the final rule before it becomes effective.

Understanding these regulations can help prepare your company for compliance.

The NYDFS has issued several regulations affecting cryptocurrency exchanges since its inception in 2015. These regulations cover everything from who must register as an “exchange” with the NYDFS to how much money must be held on reserve at each exchange before it can operate legally in New York State.

What are the requirements for NYCRR 500?

Complying with the cybersecurity program of NYCRR 500 is not easy, as organizations need professionals who can help them obtain certification of compliance. Businesses need to follow the following requirements for 23 NYCRR part 500:

  1. Establishment of a cybersecurity program that is effective in data protection.
  2. Organizations need to draft Cybersecurity policies.
  3. The regulation also demands the appointment of a Chief Information Security Officer (CISO) responsible for implementing and overseeing the cybersecurity program. The CISO will also be responsible for the following:

a. Filing cybersecurity reports

b. Conducting penetration testing

c. Vulnerability management

d. Risk assessment

e. Maintaining audit trails

f. Implementation of application security protocols

  1. Under NYCRR 500, organizations need to outsource cybersecurity services or hire professional staff for cybersecurity management.
  2. Organizations also need to establish an incident response plan and submit a report of any incident within 72 hours of occurrence. The incident report will be submitted to the Department of Financial Services of the state of New York for prompt action.
  3. Lastly, the covered entities under these regulations must submit their compliance certification to NYSDFS under NYCRR 500.

 It is pertinent to mention that failing to comply with these requirements could result in a fine of $250,000 or one percent of the organization’s assets.

This program is intended to allow a flexible schedule for compliance with 23 NYCRR Part 500 requirements. The cybersecurity program is an ongoing commitment to better protect New York’s citizens from identity theft and other threats.

Soleqs Comes to Rescue  Your Business from Cyberattacks

Businesses have nothing to worry about their compliance with NYCRR as long as they rely on Soleqs. As a veteran cybersecurity player, Soleqs help private and public organizations fix their cybersecurity problems.

We have developed a unique approach that will help our clients to comply with the requirements of NYCRR 500 to minimize the burden on staff and business.

The approach is based on the following:

  • Assessment: Identifying the gaps and areas of non-compliance, which is documented with detail of identified gaps and recommendations.
  • Restoration: Here, the Soleqs cybersecurity analyst teams up with your staff to remedy the identified gaps earlier. Our cybersecurity wing helps with the following:
  1. Developing an incident response plan
  2. Drafting cybersecurity policy
  3. Risk assessment
  4. Penetration testing
  5. Vulnerability assessment
  6. Security implementation
  • Soleqs also organizes training programs for the staff members where they will learn to use the systems under new regulations.
  • Assessment: After identification and assistance, Soleqs also runs an assessment to check if the requirements are being fulfilled completely.
  • Once the assessment is completed, you can apply for the certificate of compliance.

So what’s stopping you from getting NYCRR 500 Certification? Let’s start today with Soleqs.

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Bariki Mshomi

Bariki Mshomi

20+ years of IT experience, during which he have achieved expertise as a Data Integration Architect, Solutions Architecture, Data Architecture, ETL Architecture, and Developer, Data warehousing Modeler Database Technologies, including Oracle, SQL Server, DB2, IMS, VSAM, Teradata, Hive Data Movement using Informatica, SSIS, PDI Pentaho, PL/SQL, and SQL/PL Business Intelligence Reporting using Business Objects and Microstrategy Clients Including Highmark Health, Ramsey County MN, Century Link, Country Financial, Digi-Key, Toro, Medica, Blue Cross Blue Shield of MN, Ingenix, Cardinal Health, Data Recognition, Target, Allianz, eFunds, Fair Isaac, GE Capital Fleet, and Carlson Marketing Group

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