NY DFS Cybersecurity Audits
& Part 500 Assessments
New York's Department of Financial Services requires covered entities to maintain comprehensive cybersecurity programs under 23 NYCRR Part 500 — including annual penetration testing (§ 500.05), audit trail systems (§ 500.06), and annual officer certification (§ 500.20). Our structured program addresses every statutory requirement and positions your organization to earn the SCF Certified — NYDFS designation.
23 NYCRR Part 500 Annual Compliance Filing Due April 15 — Certification or Acknowledgment Required
All NY DFS covered entities must submit an annual compliance filing to the DFS Superintendent by April 15 each year. Starting in 2024, covered entities must choose between a Certification of Material Compliance (for entities that were materially compliant) or an Acknowledgment of Noncompliance (for entities that cannot certify full compliance). Filing must be signed by the highest-ranking executive and CISO. Failure to file — or filing a false certification — is itself a violation of Part 500.
Executive Liability:
The Annual Compliance Filing
Starting in 2024, all covered entities must submit one of two annual filings to DFS by April 15 each year: a Certification of Material Compliance — for entities that were materially compliant with all applicable Part 500 sections during the prior calendar year — or an Acknowledgment of Noncompliance — for entities that cannot certify full compliance, which must identify every noncompliant section and provide a remediation timeline.
Both filings must be signed by the covered entity's highest-ranking executive and its CISO (or the Senior Officer responsible for the cybersecurity program if no CISO is designated). This is a sworn attestation — your name, your signature, your accountability. A false Certification of Material Compliance is itself a direct violation of Part 500.
Covered entities with multiple DFS licenses must file separately for each license, and must retain all supporting data and documentation for 5 years. Our program produces a defensible, documented compliance record that supports a credible Certification of Material Compliance — and protects the executives who sign it.
Filed when the entity was materially compliant with all applicable Part 500 sections during the prior year. Signed by highest-ranking executive and CISO. Requires documented evidence retained for 5 years.
Filed when full compliance cannot be certified. Must identify all noncompliant sections, describe the nature and extent, and provide a remediation timeline or confirmation of completed remediation.
"Covered Entities will have the choice of submitting either a Certification of Material Compliance or an Acknowledgment of Noncompliance. All Covered Entities… must file one or the other each year by April 15 regarding their compliance during the previous calendar year."
— NY DFS Cybersecurity Resource Center
Two Filing Paths — One Deadline
Certify material compliance (if compliant) or acknowledge noncompliance (if not). Both paths require sign-off by the highest-ranking executive and the CISO by April 15.
False Certification = Violation
A Certification of Material Compliance without a credible documented program is not merely a gap — it is a direct regulatory violation subject to DFS enforcement against the entity and its officers.
5-Year Documentation Retention
All data and documentation supporting the annual filing must be retained for 5 years and provided to DFS upon request — § 500.17(b)(3). Documented evidence is what transforms a certification into a defensible one.
Acknowledge & Remediate
If you cannot certify full compliance, filing an Acknowledgment of Noncompliance with a credible remediation timeline demonstrates good faith — and is far better than a false certification.
23 NYCRR Part 500: The Nation's Most Rigorous Financial Sector Cybersecurity Mandate
The New York Department of Financial Services Cybersecurity Regulation (23 NYCRR Part 500), first effective March 2017 and significantly amended in November 2023, is the most comprehensive and prescriptive state cybersecurity regulation in the United States. It applies to all entities licensed, registered, or chartered by the DFS — including banks, insurance companies, mortgage servicers, money transmitters, and thousands of other financial services firms.
Unlike general cybersecurity frameworks, Part 500 imposes legally binding, enumerated requirements with specific timelines, technical mandates, officer certifications, and incident notification obligations. Non-compliance is directly enforceable by the DFS Superintendent through civil monetary penalties, cease-and-desist orders, and license revocation.
Our program addresses the full scope of Part 500 obligations — mapping every control to the statutory language, conducting independent assessments satisfying the regulation's rigor requirements, and producing defensible evidence packages recognized by DFS examiners, insurers, and courts.
Core Part 500 Program Requirements- Written cybersecurity policy approved by senior management or board (§ 500.03)
- Designated Chief Information Security Officer (§ 500.04)
- Annual penetration testing and bi-annual vulnerability assessments (§ 500.05)
- Audit trail systems with 5-year retention (§ 500.06)
- Access privilege controls and least-privilege enforcement (§ 500.07)
- Application security testing and review (§ 500.08)
- Periodic cybersecurity risk assessments (§ 500.09)
- Cybersecurity awareness training for all personnel (§ 500.14)
- Incident response plan (§ 500.16)
- Annual certification of compliance to DFS Superintendent (§ 500.20)
Does Part 500 Apply to Your Entity?
23 NYCRR Part 500 applies to any person operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization issued by the DFS — including:
- 01State-chartered banks and trust companies
- 02Insurance companies licensed in New York
- 03Mortgage bankers, servicers, and brokers
- 04Money transmitters and check cashers
- 05Premium finance agencies and budget planners
- 06Virtual currency businesses (BitLicense holders)
Limited exemptions exist for very small entities (§ 500.19), but most DFS-licensed firms are subject to the full program.
2023 Amendments — Significant Enhancements
The November 2023 amendments substantially expanded Part 500 requirements:
- +New "Class A" requirements for large covered entities
- +Mandatory independent audit function (§ 500.02)
- +Enhanced multi-factor authentication requirements
- +New 24-hour extortion payment notification (§ 500.17)
- +Expanded incident notification to include third-party events
- +Asset inventory and business continuity requirements
The Part 500 Cybersecurity
Compliance Framework
23 NYCRR Part 500 establishes specific, enforceable cybersecurity obligations across 23 sections. These are legally binding requirements with defined scope, technical specifications, personnel qualifications, and certification obligations. Our audit program is structured section-by-section around these requirements, ensuring every deliverable maps directly to the regulation.
Cybersecurity Program, Policy & CISO
Core program establishment, written policy, and organizational accountability requirements
Penetration Testing, Audit Trails & Technical Safeguards
Specific technical requirements including testing cadence, access controls, and monitoring
Incident Response, Notification & Business Continuity
Response planning, 72-hour DFS notification, and resilience requirements
Third-Party Service Providers & Application Security
Vendor management, service provider oversight, and application security requirements
Why Non-Compliance Is Not an Option
DFS cybersecurity enforcement is active, well-funded, and consistently produces significant penalties. A structured annual compliance program transforms regulatory exposure into a defensible posture.
DFS Enforcement Actions
The DFS has levied hundreds of millions of dollars in penalties against covered entities for Part 500 violations — including consent orders against major financial institutions. Enforcement actions are public, named, and permanent record.
False Certification Liability
The annual Certification of Material Compliance must be signed by the highest-ranking executive and CISO. Certifying compliance without a credible, documented program is a direct Part 500 violation — and unlike the Acknowledgment of Noncompliance option, a false certification compounds the exposure significantly.
72-Hour Notification Failure
Missing the 72-hour incident notification deadline under § 500.17 is itself a separate violation, independent of the underlying cybersecurity event. Late notifications have been cited in every major DFS enforcement action.
DFS Examination Exposure
DFS examiners routinely assess Part 500 compliance during routine safety-and-soundness examinations. Entities without documented penetration testing, audit trails, and CISO reports face immediate examination findings and remediation orders.
Procurement & Contract Risk
Enterprise customers, banking partners, and regulated counterparties increasingly require Part 500 compliance certifications as a prerequisite for doing business. A documented compliance program enables you to compete for compliance-gated relationships.
SCF Certification Advantage
Organizations earning the SCF Certified — NYDFS designation hold a verifiable, third-party-validated credential — directly supporting the § 500.20 annual certification and demonstrating compliance to DFS examiners, cyber insurers, and counterparties.
Earn the SCF Certified — NYDFS Designation
Our audit program is aligned with the Secure Controls Framework Conformity Assessment Program (SCF CAP) — an independent, third-party certification pathway that allows organizations to earn formal recognition of their 23 NYCRR Part 500 compliance posture, including satisfaction of all mandatory program elements.
The SCF is one of the most comprehensive cybersecurity and privacy control frameworks available, mapping directly to Part 500's statutory requirements. The SCF CAP produces evidence credible to DFS examiners, customers, insurers, and courts — and directly supports a defensible annual Certification of Material Compliance signed by the highest-ranking executive and CISO.
Achieving the SCF Certified — NYDFS designation signals that your organization has undergone a structured, independent assessment meeting the cybersecurity obligations of 23 NYCRR Part 500 — including all mandatory program elements from § 500.02 through § 500.20.
Our audit process is pre-aligned to SCF control requirements — evidence gathered during your Part 500 assessment maps directly to SCF CAP assessor requirements. One audit investment, one path to certification, one defensible annual compliance filing record.
What Is the Secure Controls Framework?
The SCF is a meta-framework consolidating 100+ cybersecurity and privacy regulations — including 23 NYCRR Part 500, NIST CSF, ISO 27001, SOC 2, and CIS Controls — into a unified, openly published, vendor-neutral control catalog.
What Does SCF CAP Assess for Part 500?
The SCF CAP evaluates implemented controls against all Part 500 requirements — including § 500.02 cybersecurity program, § 500.05 penetration testing, § 500.09 risk assessment, § 500.12 MFA, § 500.16 incident response, and annual compliance filing readiness under § 500.17(b).
Why SCF Certification Matters for DFS
Unlike self-attestation, SCF CAP is issued by an independent assessor using a documented methodology. It provides defensible evidence for DFS examinations, cyber insurance underwriting, counterparty due diligence, and the annual Certification of Material Compliance signed by the highest-ranking executive and CISO.
Built Into Our Audit Process
Our Part 500 audit methodology is pre-aligned to SCF controls. Evidence from penetration testing, risk assessments, and governance reviews maps directly to SCF CAP assessor requirements — no rework, one integrated compliance program.
The 23 NYCRR Part 500 Audit Process
Our framework is structured around all mandatory sections of 23 NYCRR Part 500 (§§ 500.02–500.20), aligned to the Secure Controls Framework. Every phase produces defensible deliverables satisfying statutory obligations and supporting SCF CAP certification and § 500.20 annual certification.
Scoping & Covered Entity Classification (§§ 500.01, 500.19)
We determine which Part 500 obligations apply to your entity — including whether you qualify for limited exemptions under § 500.19, whether you are subject to "Class A" enhanced requirements, and which specific sections require dedicated assessment. We inventory all information systems, nonpublic information assets, and third-party service providers in scope.
Cybersecurity Program & Risk Assessment Review (§§ 500.02, 500.03, 500.09)
We assess your written cybersecurity program (§ 500.02), cybersecurity policy (§ 500.03), and periodic risk assessment (§ 500.09) against Part 500's requirements. We evaluate whether the program addresses all required elements: access controls, data governance, asset inventory, business continuity, vendor management, and incident response.
Penetration Testing & Vulnerability Assessment (§ 500.05)
We conduct or coordinate qualified annual penetration testing and bi-annual vulnerability assessments required by § 500.05. Testing is performed by qualified personnel with sufficient independence from the systems tested, based on your § 500.09 risk assessment results. All findings are documented with severity ratings and mapped to remediation requirements.
Technical Controls Assessment (§§ 500.06–500.15)
We assess all required technical controls: audit trail systems and 5-year retention (§ 500.06), access privilege management and least privilege (§ 500.07), application security practices (§ 500.08), multi-factor authentication coverage (§ 500.12), encryption of nonpublic information (§ 500.15), and monitoring and training programs (§ 500.14).
CISO, Third-Party & Incident Response Review (§§ 500.04, 500.10, 500.11, 500.16)
We assess CISO qualifications and annual board reporting requirements (§ 500.04), third-party service provider security policies and vendor due diligence (§ 500.11), cybersecurity personnel and threat intelligence (§ 500.10), and incident response plan completeness and testing (§ 500.16) — including notification readiness for the 72-hour and 24-hour DFS reporting requirements.
Annual Compliance Filing & CISO Board Report (§§ 500.04, 500.17(b))
We prepare the complete annual compliance filing package — either a Certification of Material Compliance (for entities in material compliance) or an Acknowledgment of Noncompliance with remediation timeline (for entities with gaps). Both require signatures from the highest-ranking executive and CISO by April 15. We also prepare the CISO's annual board report required by § 500.04(b) and ensure all supporting documentation is retained and organized for the mandatory 5-year retention requirement under § 500.17(b)(3).
Remediation & Annual Compliance Cycle Management
We implement prioritized remediation against assessment findings, track progress to closure, and establish the ongoing annual compliance cycle required by Part 500. This includes scheduling next-year penetration testing and vulnerability assessments, DPIA refresh obligations, and the April 15 certification filing calendar — ensuring continuous Part 500 compliance year-over-year.
Editable Policy Documentation
for Part 500 Compliance
Demonstrating Part 500 compliance — particularly the § 500.03 cybersecurity policy and § 500.02 program requirements — demands more than completed assessments. DFS examiners and courts expect to see documented policies, standards, and procedures governing how nonpublic information is protected and how the cybersecurity program operates day-to-day.
ComplianceForge provides professionally authored, editable cybersecurity and data privacy documentation mapped 1-to-1 to Secure Controls Framework (SCF) controls. This direct SCF mapping means your policy documentation automatically aligns with the same control framework used in your Part 500 audit — creating a seamless, defensible evidence chain from policy to practice to certification.
ComplianceForge documentation covers the full spectrum of controls needed to satisfy Part 500's written policy requirement: cybersecurity policies aligned to § 500.03, access control procedures for § 500.07, incident response plans for § 500.16, third-party management policies for § 500.11, encryption standards for § 500.15, and more — all pre-mapped to SCF and Part 500 obligations.
1-to-1 SCF Control Mapping
Every policy, standard, and procedure maps directly to SCF controls — the same framework your Part 500 audit uses. No manual crosswalking required to satisfy § 500.03.
Fully Editable & Customizable
Delivered in editable formats — tailor policies to your specific operating environment, technology stack, DFS license type, and organizational structure.
Broad Regulatory Coverage
Covers Part 500 requirements alongside NIST CSF, ISO 27001, SOC 2, GLBA, and more — your documentation investment supports compliance across multiple regulatory frameworks simultaneously.
Integrated with Your Audit Program
ComplianceForge documentation is selected and implemented as part of your Part 500 audit remediation — directly addressing policy gaps identified in your § 500.03 assessment findings.
Mapped 1-to-1 to SCF Controls
- ✓Cybersecurity Policy & Program Standards (§ 500.03 aligned)
- ✓Access Control & Privilege Management Procedures (§ 500.07)
- ✓Incident Response Plan & 72-Hour Notification Procedures (§ 500.16/17)
- ✓Third-Party Service Provider Security Policy (§ 500.11)
- ✓Encryption & Data Protection Standards (§ 500.15)
- ✓Business Continuity & Disaster Recovery Procedures (§ 500.16(b))
- ✓Data Retention & Secure Disposal Standards (§ 500.13)
What Part 500 Requires:
Core Cybersecurity Controls
23 NYCRR Part 500 requires covered entities to implement and maintain a cybersecurity program containing specific, enumerated administrative, technical, and physical safeguards. Unlike general "reasonable security" standards, Part 500 mandates specific controls, specific testing cadences, and specific documentation requirements — all verifiable by DFS examiners.
Following a cybersecurity event — whether a breach, ransomware attack, or system intrusion — DFS examiners will assess whether your controls met Part 500's requirements. The absence of documented controls in any of the enumerated areas is a direct violation, independent of whether the event itself resulted in harm.
The controls below represent the core technical and operational safeguards assessed in every Part 500 compliance audit. Each finding is rated by severity and mapped to Part 500 statutory obligations and SCF controls — producing the evidence package needed for § 500.20 annual certification.
Schedule Your Part 500 Assessment ›Multi-Factor Authentication (§ 500.12)
MFA required for remote access, privileged accounts, and access to nonpublic information. The 2023 amendments expanded MFA scope significantly — gaps are a primary DFS examination finding.
Access Privilege Management (§ 500.07)
Least-privilege enforcement, periodic access reviews, privileged access management, and password management across all systems processing nonpublic information.
Annual Penetration Testing (§ 500.05)
Annual pen testing and bi-annual vulnerability assessments are mandatory. Testing must be based on the risk assessment and conducted by qualified, independent personnel — not merely automated scanning.
Audit Trail & 5-Year Retention (§ 500.06)
Comprehensive audit trail systems tracking all access to and modification of nonpublic information. All records must be retained for a minimum of five years — auditable by DFS examiners.
Incident Response & 72-Hour Notification (§§ 500.16, 500.17)
Written, tested incident response plan with defined roles, escalation, and recovery procedures — and pre-established 72-hour DFS notification and 24-hour ransomware payment reporting processes.
Third-Party Vendor Security (§ 500.11)
Written vendor security policies, contractual protections requiring third parties to maintain appropriate security, and due diligence for all service providers with access to nonpublic information.
Supported By
Our 23 NYCRR Part 500 audit program is powered by a curated ecosystem of industry-leading technology, framework, and compliance partners.
23 NYCRR Part 500: Common Questions
Who is a covered entity under 23 NYCRR Part 500?
Under § 500.01(c), a Covered Entity is any person operating under or required to operate under a DFS license, registration, charter, certificate, permit, or similar authorization — including state-chartered banks, insurance companies, mortgage servicers, money transmitters, check cashers, premium finance agencies, and virtual currency businesses. Contact us for a covered entity determination review.
What are the 2023 amendment changes to Part 500?
The November 2023 amendments substantially expanded Part 500 requirements, introducing new "Class A" requirements for large entities, enhanced MFA mandates, a new 24-hour extortion payment notification, expanded incident notification scope to cover third-party events, asset inventory requirements, and a strengthened independent audit function requirement under § 500.02.
What does § 500.05 require for penetration testing?
Section 500.05 requires annual penetration testing of information systems and bi-annual vulnerability assessments. Testing must be based on the results of your § 500.09 risk assessment and must be conducted by qualified personnel with sufficient independence. Our program includes or coordinates both the testing and the documented methodology required by the regulation.
What is the annual compliance filing and when is it due?
Starting in 2024, covered entities must submit one of two annual filings to DFS by April 15 each year for the prior calendar year: a Certification of Material Compliance if the entity was materially compliant with all applicable Part 500 sections, or an Acknowledgment of Noncompliance if it cannot certify full compliance. The Acknowledgment must identify all noncompliant sections, describe the nature and extent of noncompliance, and provide a remediation timeline. Both filings must be signed by the highest-ranking executive and the CISO (or the Senior Officer responsible for the cybersecurity program if no CISO is designated). Entities with multiple DFS licenses must file separately for each. All supporting documentation must be retained for 5 years under § 500.17(b)(3).
Is a CISO required under Part 500, and what must they do?
Yes. Section 500.04 requires each covered entity to designate a qualified CISO. The CISO must report to the board of directors at least annually on the cybersecurity program status, material risks, and recommendations. This CISO board report is a required deliverable under § 500.04(b) and is assessed during DFS examinations. We prepare and support the CISO board report as part of every engagement.
What are the 72-hour and 24-hour DFS notification requirements?
Under § 500.17(a), covered entities must notify the DFS Superintendent within 72 hours of determining that a cybersecurity event has materially affected operations. Under § 500.17(b), extortion and ransomware payments must be separately reported within 24 hours of payment. Our incident response program establishes the notification workflows needed to meet both deadlines.
Does our SOC 2 or ISO 27001 certification satisfy Part 500?
Not automatically. SOC 2 and ISO 27001 address cybersecurity controls broadly but do not map directly to Part 500's specific enumerated requirements — including annual penetration testing, 5-year audit trail retention, MFA mandates, and the § 500.20 annual certification. We perform comparability analyses to identify existing evidence that may be leveraged and gaps requiring additional work.
What happens if we can't certify full compliance — do we have to file anyway?
Yes — and this is a critical point. Every covered entity that is not exempt from § 500.17 must file one of the two annual notifications by April 15. If you cannot certify material compliance, you must file an Acknowledgment of Noncompliance that: (1) acknowledges that the entity did not materially comply; (2) identifies every noncompliant section; (3) describes the nature and extent of noncompliance; and (4) provides a remediation timeline or confirmation that remediation has been completed. Filing a transparent Acknowledgment of Noncompliance is the correct path and demonstrates good faith. Filing nothing, or filing a false Certification of Material Compliance, exposes the entity and its officers to significantly greater regulatory risk.
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