New York DFS's regulatory guidance details how AI advancement creates significant cybersecurity opportunities for criminals while enhancing threat detection capabilities for financial institutions under the state's cybersecurity regulation framework. The analysis emphasizes AI-enabled social engineering as the most significant threat to financial services while requiring covered entities to assess and address AI-related cybersecurity risks through existing Part 500 obligations. This state financial regulatory analysis demonstrates how AI transforms cyber risk landscapes by enabling sophisticated attacks at greater scale and speed while simultaneously providing improved defensive capabilities for prevention, detection, and incident response strategies.