European Union: Reached Council and Parliament agreement on AI Act including conformity assessment and business registration requirement for "high-risk AI systems"

On 9 December 2023, the Parliament and the Council of the European Union adopted a provisional agreement on the proposal on harmonised rules on artificial intelligence (AI Act). The compromise agreement clarifies the definition of an AI system by aligning it with the OECD's proposed approach, seeking to differentiate AI from simpler software systems. The AI Act specifically exempts systems exclusively utilised for military or defence purposes and those employed solely for research, innovation, or non-professional personal use. The Act includes conformity assessment and business registration requirements for "high-risk AI systems", contingent upon meeting a set of requirements and obligations for entry into the EU market. The agreement includes amendments related to data quality and technical documentation with the aim of ensuring that SMEs are able to demonstrate compliance with the requirements for their high-risk AI systems. Furthermore, the agreement empowers individuals by allowing them to file complaints with relevant market surveillance authorities regarding non-compliance with the AI Act. In terms of enforcement, the AI Act introduces fines for violations, calculated as a percentage of the offending company's global annual turnover. The fines are tiered, EUR 35 million or 7% for prohibited AI applications, EUR 15 million or 3% for violations of the Act's obligations, and EUR 7.5 million or 1.5% for supplying incorrect information. Following the provisional agreement, the next steps involve finalising the document and submitting it to the European Union Parliament and Council for adoption.