The EU Artificial Intelligence Act (AI Act), Regulation (EU) 2024/1689, came into force on 1 August 2024. As outlined in my previous article headlined EU AI Act Proposal and Regulation of Financial Services, the AI Act has a two-year implementation period, while most of the rules and obligations under the AI Act will be enacted after 2 August 2026.
Since the AI Act is an EU regulation, it will directly apply to EU seated financial service entities and service providers without requiring any implementation through national laws of the EU member states. Ultimately, the AI Act will restrict the deployment of certain classes of artificial intelligence systems (AI Systems) and will regulate their use, provision, import and distribution. The definition of AI Systems can be found in Article 3(1) of the AI Act;
“‘AI system’ means a machine-based system that is designed to operate with varying levels of autonomy and that may exhibit adaptiveness after deployment, and that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations or decisions that can influence physical or virtual environments.”
The list of AI techniques and approaches provided in the Annex of the AI Act includes machine learning methods, logic- and knowledge-based methods, statistical methods and estimations, as well as search and optimisation techniques. The EU Commission will have the authority to revise the attached list of methods and techniques to align it with developments in technology and the market. However, users, as well as importers and distributors of third-party software, and companies that commission or modify thirdparty software, may lack adequate information to ascertain whether the software was created using the techniques or approaches mentioned. Regardless, it appears probable that new software will make greater use of methods and strategies linked to acknowledged AI technologies. Consequently, companies might need to consider whether their software could potentially be included in the definition, and therefore routinely study the provisions of the AI Act to determine whether software is prohibited or might be subject to regulation.
