European AI Act Formally Came into Force

The European Artificial Intelligence Act (AI Act), the world's first comprehensive regulation on artificial intelligence, entered into force. The AI Act is designed to ensure that AI developed and used in the EU is trustworthy, with safeguards to protect people's fundamental rights.

The regulation aims to establish a harmonized internal market for AI in the EU, encouraging the uptake of this technology and creating a supportive environment for innovation and investment. The AI Act introduces a forward-looking definition of AI, based on a product safety and risk-based approach in the EU.

Minimal risk systems include most AI systems, such as AI-enabled recommender systems and spam filters, fall into this category. These systems face no obligations under the AI Act due to their minimal risk to citizens' rights and safety. Companies in that category can voluntarily adopt additional codes of conduct.

Specific transparency risk systems include those like chatbots and must clearly disclose to users that they are interacting with a machine. Certain AI-generated content, including deep fakes, must be labeled as such, and users need to be informed when biometric categorization or emotion recognition systems are being used. In addition, providers will have to design systems in a way that synthetic audio, video, text, and image content is marked in a machine-readable format, and detectable as artificially generated or manipulated.

High risk includes AI systems identified that will be required to comply with strict requirements, including risk-mitigation systems, high-quality data sets, logging of activity, detailed documentation, clear user information, human oversight, and a high level of robustness, accuracy, and cybersecurity. Regulatory sandboxes will facilitate responsible innovation and the development of compliant AI systems. Such high-risk AI systems include for example AI systems used for recruitment, or assessing whether somebody is entitled to get a loan or to run autonomous robots.

Unacceptable risk systems are considered a clear threat to the fundamental rights of people and will be banned. This includes AI systems or applications that manipulate human behavior to circumvent users' free will, such as toys using voice assistance to encourage the dangerous behavior of minors, systems that allow ‘social scoring' by governments or companies, and certain applications of predictive policing. In addition, some uses of biometric systems will be prohibited.

To complement this system, the AI Act also introduces rules for so-called general-purpose AI models, highly capable AI models that are designed to perform a wide variety of tasks like generating human-like text. General-purpose AI models are increasingly used as components of AI applications. The AI Act will ensure transparency along the value chain and address possible systemic risks of the most capable models.

Member States have one year to designate national competent authorities, who will oversee the application of the rules for AI systems and carry out market surveillance activities. The European Commission's  AI Office will be the key implementation body for the AI Act at the EU level, as well as the enforcer of the rules for general-purpose AI models.

Three advisory bodies will support the implementation of the rules. The European Artificial Intelligence Board will ensure a uniform application of the AI Act across EU Member States and will act as the main body for cooperation between the Commission and the Member States. A scientific panel of independent experts will offer technical advice and input on enforcement. In particular, this panel can issue alerts to the AI Office about risks associated with general-purpose AI models. The AI Office can also receive guidance from an advisory forum, composed of a diverse set of stakeholders.

Companies not complying with the rules will be fined. Fines could go up to 7% of the global annual turnover for violations of banned AI applications, up to 3% for violations of other obligations, and up to 1.5% for supplying incorrect information.

The majority of the rules of the AI Act will start applying on 2 August 2026. However, prohibitions of AI systems deemed to present an unacceptable risk will already apply after six months, while the rules for so-called General-Purpose AI models will apply after 12 months. To bridge the transitional period before full implementation, the EC has launched the AI Pact. This initiative invites AI developers to voluntarily adopt key obligations of the AI Act ahead of the legal deadlines.