What Smart Banks Know About FFIEC CAT Sunset Planning (That You Don’t)

The Aug. 31, 2025, sunset of the FFIEC Cybersecurity Assessment Tool (CAT) exemplifies the accelerating pace of regulatory change that’s overwhelming financial institutions. Even banks already prepared for (or unimpacted by) the CAT transition face a wave of concurrent regulatory shifts that require ongoing specialized expertise to navigate successfully. There’s valuable and necessary work to be done beyond the immediate deadlines. Ongoing regulatory shifts, combined with skills shortages and budget constraints, are driving demand for specialized, strategic cybersecurity consulting.

In brief:

• The FFIEC CAT sunset on Aug. 31, 2025, signals a fundamental shift from static compliance tools to continuous, adaptive regulatory frameworks.
• Regulatory changes are accelerating and overlapping. Banks face concurrent deadlines, including PCI DSS 4.0, NIST Cybersecurity Framework 2.0, and ISO 20022 transitions.
• Internal teams are overwhelmed by the pace of change, creating dangerous compliance gaps and resource conflicts.
• This change requires a strategic shift. You must move from reactive crisis management to proactive regulatory partnerships and fractional expert support.
• Banks that embrace continuous compliance expertise will outperform those stuck in annual review cycles.

Many finance, security, and IT leaders are paying close attention to the rapidly approaching sunset date of Aug. 31, 2025, for the Federal Financial Institutions Examination Council (FFIEC) Cybersecurity Assessment Tool (CAT). This quickly approaching regulatory change represents the reality of continuous regulatory evolution.

Multiple, concurrent regulatory shifts are delivering sustained compliance pressure. Additionally, skill shortages and budget constraints mean that more banks are seeing the value in engaging external experts.

This new era of rapid regulatory change requires smart banks to assess fractional, hybrid, and other nontraditional (non-full-time) cybersecurity resources to fill the expertise gap.

The FFIEC CAT Sunset: Symptom of a Larger Regulatory Revolution

The FFIEC announced the CAT sunset deadline in August 2024, giving financial institutions one year to prepare. Even with this heads-up, banks face a wave of concurrent regulatory shifts requiring ongoing specialized expertise.

Beyond the short-term immediate challenge, it’s a long-term mindset shift to realize these changes are going to start happening more frequently. Add in a cybersecurity skills gap and talent shortage, and it’s a perfect storm for banking organizations that aren’t well prepared.

A larger regulatory revolution is on the horizon, marked by proactive resilience, frequent changes, and more adaptive, principle-based frameworks. Adapting to this rapidly evolving space involves exploring strategic and specialized cybersecurity consulting services.

Why the CAT Sunset Signals Fundamental Change

The FFIEC CAT is a perfect example of static regulatory tools becoming obsolete. According to the World Economic Forum, regulations are increasingly seen as a crucial factor in enhancing baseline security posture and fostering public trust. Overall, we are witnessing a shift from standardized tools to adaptive, principle-based frameworks because the pace and complexity of cybersecurity have outgrown the one-and-done checklist approach.

Regulators have high expectations for institutions: They now require additional oversight, the ability to pivot quickly, and contextual risk awareness. Additionally, regulatory agencies are increasingly adopting more dynamic oversight approaches, such as thematic reviews and risk-based supervision.

The Immediate CAT Transition Challenge

In the short term, banking organizations are in the final weeks of preparation for framework transition. If your bank hasn’t transitioned away from CAT yet, the NIST Cybersecurity Framework 2.0 is a top recommendation. It’s a scalable, principle-based structure that aligns nicely with modern cybersecurity best practices.

There will undoubtedly be last-minute compliance gaps and documentation needs, as well as audit report readiness. You need to update your board on the transition status, and all the while, you must also maintain day-to-day operations and keep your infrastructure secure during the transition.

What This Means for Future Regulatory Management

The future of regulatory management is fast-paced and dynamic. Instead of regular, periodic compliance, expect continuous adaptation that remains a top priority at all times.

For example, significant security incidents now must be reported within 72 hours, and the NIST Cybersecurity Framework encourages continuous reviews, not just annual ones. Regulations are increasingly intertwined and complex, with higher expectations for proactive risk management.

The old days of a one-and-done annual review are over. Banking institutions need specialized, ongoing, and fractional expertise instead of the traditional project-based solutions.

Let’s discuss some of the recent regulatory changes that have overwhelmed banks, requiring a shift to a more flexible security support model.

The Regulatory Tsunami: Multiple Concurrent Changes Are Overwhelming Banks

The banking industry is changing more rapidly than ever, and regulators are adapting to keep pace with the fast-changing world. Bank compliance has faced significant concurrent changes in the past two years. For example, the ISO 20022 deadline is approaching, and PCI DSS 4.0 was due just a few months ago.

2024 – 2025: Recent Confluence of Regulatory Updates

The recent slew of regulatory updates signals more dynamic assessments, stringent controls, and quick implementation of new technologies for 24/7 threat monitoring, real-time incident response, and continuous risk management.

All of the updates below demonstrate that basic documentation is no longer sufficient:

• NIST Cybersecurity Framework 2.0 (February 2024 release)
• PCI DSS 4.0 compliance deadline (March 31, 2025)
• NYDFS Part 500 amendments (November 2024 to May 2025)
• DORA implementation (Jan. 17, 2025)
• ISO 27001: 20022 transition deadline (Oct. 31, 2025)

State and International Regulatory Complexity

Additionally, state and international boards are introducing new requirements in response to the needs of their constituents. The New York Department of Financial Services has specific board governance requirements for regulated entities, and the U.K. Operational Resilience rules implemented March 31, 2022, require businesses to prove they’ll remain operational during severe but plausible scenarios.

The EU Artificial Intelligence Act also has implications for U.S. institutions operating in the European Union, meaning a U.S. business may be flagged as “high risk” if it uses AI tools for credit scoring or fraud detection.

The Acceleration Problem

Regulatory change cycles are shortening from years to months with overlapping implementation timelines. For example, organizations were implementing the PCI DSS in sync with the NIST Cybersecurity Framework 2.0 and NYDFS Part 500. These concurrent framework transitions create significant resource conflicts and put intense pressure on internal teams.

In another example, the Big Beautiful Bill in 2025 modified individual and business tax relief options while reducing tax incentives around renewable energy operations. This new bill comes on the heels of other legislation passed by the former Biden administration, almost completely shifting the tone 180 degrees. This rapid acceleration creates logistical complexities.

With additional complexities and accelerating timelines, even the most well-prepared banks need continuous help.

Why Even Well-Prepared Banks Need Ongoing Expertise

To mitigate risks in financial services, even the most well-prepared banks need ongoing expertise. Transitions to new compliance frameworks are just the beginning. Ongoing regulatory monitoring and interpretation requirements create a need for proactive adaptation to regulatory evolution.

The Resource Reality Check

The reality is that internal teams are overwhelmed by operational demands, and most are not trained for constant regulatory changes. These changes require specialized regulatory expertise, as opposed to general cybersecurity knowledge, to navigate.

Additionally, it’s expensive to maintain current regulatory intelligence, as well as extensive board and executive reporting requirements. Treating these regulations as an afterthought is a dangerous approach that potentially leads to hastily assembling compliance requirements and, as a result, failing a critical audit.

The Strategic Shift: From Crisis Response to Proactive Management

Financial services must shift beyond reactive compliance to strategic regulatory positioning by building adaptive compliance programs that are constantly ready for future changes.

Instead of compliance being a nerve-racking and stressful process, these new frameworks can become a competitive advantage through superior regulatory management.

Centric Consulting expert Bethany Deeds, data protection and audit resilience manager, says, “Banks preparing for the next wave of regulation should focus on continuous risk assessment and prioritization, agile processes, clear data analytics, robust governance, and strong accountability across the board.”

Bank compliance is evolving. Let’s explore how it’s shifting from projects to partnerships.

The Evolution of Cybersecurity Consulting: From Projects to Partnerships

Instead of one-off projects, cybersecurity consulting for financial organizations is increasingly shifting to the long-term partnership model. Ongoing regulatory advisory services can support continuously monitoring regulatory developments, conduct proactive gap analyses and compliance planning, and provide regulatory interpretation and implementation guidance.

Solutions like Centric’s virtual chief information security officer (vCISO) program support this rapid evolution by delivering executive-level risk strategy without the cost of a full-time hire. Businesses receive proactive compliance planning and continuous monitoring of regulatory changes.

Strategic Compliance Partnership Models

Deeds outlines the circumstances under which a business might require additional outside regulatory compliance expertise: “If you’re running into frequent or unresolved noncompliance findings, missed regulatory deadlines, or increased regulatory scrutiny, it’s time to bring in external support. It’s more than just a simple operational hiccup. It’s a warning sign that your internal team is stretched too thin and is probably on the way to miss something bigger.”

Flexible Models to Consider

• Hybrid and fractional vCISO: Get fractional support from senior-level security experts to lead your most pressing security initiatives. Explore the CISO as a service model as another type of customized engagement.
• Quarterly compliance reviews: Instead of the annual review, get immediate action items and identify problems sooner with shorter review cycles.
• Board and executive education programs: Educate senior leadership on the emerging risks, regulatory expectations, and their role in governance.
• Project or program-based consulting: Bring in specialized support for a specific audit, implementation, or deadline.

The Strategic Benefit of Continuous Expertise

Not only are these fractional solutions a remedy for traditional CISO or IT burnout, but they’re incredibly cost-efficient compared to building internal regulatory teams. Organizations receive access to specialized knowledge across multiple jurisdictions with proactive risk identification and mitigation.

There’s a significant benefit to continuous expertise, and it’s a core pillar for building adaptive compliance for the future.

Building Adaptive Compliance for the Future

Financial organizations can learn a lot from the FFIEC CAT sunset. No framework is permanent, and internal processes must remain flexible and adaptable to change. Organizations increasingly need continuous expert guidance, particularly for the strategic advantage of early adaptation.

Modern financial institutions require integrated regulatory intelligence systems, cross-functional compliance coordination, ongoing stakeholder education and communication, and strategic regulatory planning processes — all of which can be reliably outsourced to a third-party expert.

Transform Regulatory Change From Burden to Advantage

The FFIEC CAT sunset is just one example of the new era of continuous regulatory evolution. Future-thinking institutions will embrace ongoing expertise to lead their business into the next wave of regulations, proactively maintaining their compliance. These businesses are well positioned to adapt quickly and potentially gain a competitive edge.

Smart banks have made the shift from crisis management to strategic regulatory partnership.

Discuss building adaptive compliance capabilities for your long-term success with our Cybersecurity experts. We understand the complex and ever-changing banking industry. Let’s talk