Draft EU Regulation For Artificial Intelligence Proposes Fines Of Up To 6% Of Total Annual Turnover – JD Supra

Summary

After the presentation of a general European Approach to Artificial Intelligence by the EU Commission in March 2021, a detailed draft regulation aimed at safeguarding fundamental EU rights and user safety was published today (Draft Regulation). The Draft Regulations main provisions are the following:

The Draft Regulation applies to the placing on the market, putting into service, and use of AI Systems by Providers and Users in the EU, as well as other parties in specific cases.

The Draft Regulation includes a list of prohibited AI practices that are understood to contravene the EUs values and fundamental rights:

Natural persons must be notified when they are interacting with an AI System where it is not obvious from the circumstances and the context of the use. This obligation does not apply where the AI System is used to detect, prevent, investigate, or prosecute criminal offenses. Where AI Systems are used to generate audio or video content that resembles existing persons, objects, places, etc. (so-called deep fakes), the artificial creation of such content must be disclosed.

The Draft Regulation introduces three categories of High-Risk AI Systems and subjects Providers and Users as well as importers and distributors of such AI Systems to specific obligations. High-Risk AI Systems include:

The list is not conclusive. When the EU Commission identifies other AI Systems generating a high level of risk of harm, those AI Systems may be added to this list.

With regard to obligations linked to High-Risk AI Systems, the Draft Regulation provides for different sets of obligations for Providers, Users, importers, and distributors, respectively.

a. Providers obligations for High-Risk AI Systems

b. Users obligations for High-Risk AI Systems: Users must use High-Risk AI Systems in accordance with the instructions indicated by the Provider, monitor the operation for evident anomalies, and keep records of the input data.

c. Importers obligations for High-Risk AI Systems: Importers must, among other obligations, ensure that the conformity assessment procedure has been carried out and technical documentation has been drawn up by the Provider before placing a High-Risk AI System on the market.

d. Distributors obligations for High-Risk AI Systems: Distributors must, among other obligations, verify that the High-Risk AI System bears the required CE conformity marking and is accompanied by the required documentation and instructions for use.

e. Users, importers, distributors, and third parties becoming Providers: Any party will be considered a Provider and subject to the relevant obligations if it (i) places on the market or puts into service a High-Risk AI System under its name or trademark, (ii) modifies the intended purpose of the High-Risk AI System already placed on the market or put into service, or (iii) makes substantial modifications to the High-Risk AI System. In any of these cases, the original Provider will no longer be considered a Provider under the Draft Regulation.

The Draft Regulation provides for substantial fines in cases of non-compliance as follows:

It is expected that stakeholders will present various concerns and modification requests to the EU Commission which will likely cause a debated and challenging legislative process. We will keep you updated.

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Draft EU Regulation For Artificial Intelligence Proposes Fines Of Up To 6% Of Total Annual Turnover - JD Supra