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NYDFS Expands Cybersecurity Requirements for Licensed Financial Services Companies

By Justin Herring, Jeffrey P. Taft, Stephen Lilley, Matthew Bisanz, Lawrence R. Hamilton & Julyana Dawson on July 6, 2023
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On June 28, 2023, the New York Department of Financial Services (“NYDFS”) published updated proposed amendments to its cybersecurity regulation (the “2023 Proposal”) applicable to “covered entities.”1 Covered entities are any person operating under, or required to operate under, a license, registration, charter, certificate, permit, accreditation or similar authorization under the New York Banking Law, Insurance Law or Financial Services Law. These updated amendments come after comments from industry groups and other stakeholders to the NYDFS’s proposed revisions that were published on November 9, 2022 (the “2022 Proposal”).2 Comments on the 2023 Proposal may be submitted until August 14, 2023.

In this Legal Update, we provide a section-by-section analysis of new requirements in the 2023 Proposal. The 2023 Proposal is extensive and would significantly expand requirements for covered entities. Key new and expanded requirements include: (1) new requirements for larger companies (Class A Companies, as defined below); (2) expanded governance requirements, such as board approval for cybersecurity policies; (3) expanded cyber incident notice and compliance certification requirements; (4) expanded requirements for asset inventory; and (5) a revised multi-factor authentication requirement for user access to a company’s network.

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Photo of Jeffrey P. Taft Jeffrey P. Taft

Jeffrey Taft is a partner in the Firm’s Financial Services Regulatory & Enforcement group and the Cybersecurity and Data Privacy practice. His practice focuses primarily on bank regulation, bank receivership and insolvency issues, payment systems, consumer financial services and cybersecurity/privacy issues. He has…

Jeffrey Taft is a partner in the Firm’s Financial Services Regulatory & Enforcement group and the Cybersecurity and Data Privacy practice. His practice focuses primarily on bank regulation, bank receivership and insolvency issues, payment systems, consumer financial services and cybersecurity/privacy issues. He has extensive experience counseling financial institutions, merchants, technology companies and other entities on various federal and state banking and consumer credit issues, including compliance with the Bank Holding Company Act, National Bank Act, International Banking Act, Consumer Financial Protection Act, Truth-in-Lending Act, the Fair Credit Reporting Act, the Electronic Fund Transfer Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act, state unfair or deceptive acts or practices statutes, CFPB’s UDAAP authority and the development and implementation of privacy, cybersecurity and information security programs under the Gramm-Leach Bliley Act, the NYDFS cybersecurity regulation and industry standards, such as PCI DSS and NIST.

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Photo of Stephen Lilley Stephen Lilley

Stephen Lilley is a partner in the Washington DC office of Mayer Brown. He focuses his practice on helping clients navigate cutting-edge and interrelated litigation, regulatory, and policy challenges. A member of the firm’s Litigation and Cybersecurity & Data Privacy practices, Stephen develops…

Stephen Lilley is a partner in the Washington DC office of Mayer Brown. He focuses his practice on helping clients navigate cutting-edge and interrelated litigation, regulatory, and policy challenges. A member of the firm’s Litigation and Cybersecurity & Data Privacy practices, Stephen develops strategies to manage legal risks and to shape regulatory policy across a broad range of substantive areas.

Stephen has significant experience working with clients to identify, evaluate, and manage cybersecurity and data privacy risks; responding to cyber incidents and vulnerability disclosures; and defending businesses in related litigation. Stephen is regularly called upon to advise senior executives and board members on their most challenging cybersecurity risks, to help companies develop governance programs to mitigate those risks, and to lead training exercises to implement and refine those programs. Stephen has particular experience advising on cybersecurity and national security issues relating to the Internet of Things, including vehicles and medical devices, and to manufacturing, critical infrastructure, and other industrial systems. Widely recognized for his cybersecurity law and policy experience, Stephen previously served as Chief Counsel to the Senate Judiciary Committee’s Subcommittee on Crime and Terrorism, where he focused on cybersecurity issues.

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  • Posted in:
    Privacy and Cybersecurity
  • Blog:
    Inside Cybersecurity & Privacy Law
  • Organization:
    Mayer Brown

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