The Artificial Intelligence Act

The Artificial Intelligence (AI) Act is the first comprehensive regulatory framework for artificial intelligence, as it includes rules related to ethical AI use and enhanced consumer protection, and it supports innovation and market access.

Affected businesses

Almost every single organization developing, deploying or using an AI system must comply with the AI Act, regardless of whether such organisation is established in the European Union.

The AI Act has an extraterritorial effect, which means that it also applies to providers or deployers of AI systems established or located outside the EU where the output of the system is used in the EU.

Key impacts

The AI Act introduces a multi-tiered and gradual scheme of requirements and obligations depending on the level of risk posed to health, safety and fundamental rights.

Whereas AI systems falling under the ‘unacceptable risk’ category are forbidden, those falling under other categories, depending on the circumstances, would need to comply with different obligations, such as:

• Providing adequate transparency and provision of information to users.
• Ensuring human oversight to mitigate risks and ensure ethical use.
• Providing comprehensive technical and security measures.
• Upholding an obligation to undergo conformity assessments.

Enforcement

Depending on the nature of the infringement, up to 35,000,000 euros – or, if the offender is an undertaking, up to 7% of its total worldwide annual turnover for the preceding financial year, whichever is higher.

Key timings

The AI Act entered into force on 1 August 2024 and will apply from 2 August 2026. However, certain provisions will become applicable at a different date, namely:

• Chapters I (General provisions) and II (Prohibited practices) shall apply from 2 February 2025.
• Chapter III, Section 4 (High risk systems, notifying authorities and notified bodies), Chapter V (General-purpose AI models), Chapter VII (Governance) and Chapter XII (Penalties) shall apply from 2 August 2025, with the exception of Article 101 (Fines for providers of general-purpose AI models).
• Article 6(1) (Classification rules for high-risk AI systems) and the corresponding obligations in the AI Act will apply from 2 August 2027.

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