European co-legislators have agreed a provisional agreement on the EU AI Act which seeks to harmonise AI regulations across the EU. The agreement balances innovation with fundamental rights and safety and positions the EU as a leader in digital regulation. The EU AI Act includes prohibitions on biometric identification, updated requirements for high-risk AI systems, and a two-tiered approach for general purpose AI systems. It is expected to gradually enter into force with provisions on prohibitions coming into effect within six months and provisions on transparency and governance coming into effect after twelve months. The EU AI Act will likely set a global benchmark for the ethical and responsible design, development, and deployment of AI systems.

The EU's proposed regulation on harmonising rules for AI systems, known as the EU AI Act, is going through trilogue meetings between the Parliament, Commission and Council. With European elections approaching in June 2024 and increasing regulatory steps being taken by major AI powers like the US and China, pressure is mounting to adopt the EU AI Act into law by the end of 2023. However, controversies are emerging, particularly around regulation of foundation models. If critical issues remain unresolved, the most contested elements of the legislation may be left out of the final iteration and delegated to the proposed AI Office or future harmonised standardisation initiatives.

Lord Chris Holmes introduced The Artificial Intelligence (Regulation) Bill in the UK House of Lords, which mandates the establishment of a dedicated AI Authority responsible for enforcing the regulation. The Bill defines AI and sets up regulatory principles and sandboxes to support innovation. It also proposes the appointment of AI responsible officers and enforces transparency, IP obligations, and labelling. It remains uncertain whether the Bill will be adopted, but AI regulations are gaining momentum worldwide. It is crucial to prioritize the development of AI systems that promote ethical principles such as fairness and harm mitigation. Holistic AI offers expertise in AI governance, risk, and compliance.

The European Union's ongoing work on the EU AI Act will affect the entire AI industry and regulate AI systems based on risk classification. High-risk AI systems will be subject to a comprehensive list of requirements, while low-risk AI systems will explore the feasibility of voluntary codes of conduct. The EU AI Act is expected to become the gold standard for the AI industry, and enterprises using AI systems are advised to prepare for compliance early to avoid financial burden and penalties for non-compliance. The exact pathway for compliance will depend on the unique circumstances of each enterprise.

The EU AI Act is expected to pass European legislative procedures by the end of 2023, with a grace period of two to three years before it comes into force. The Act is focused on consumer protection rather than product safety legislation and relies heavily on standards and implementing acts. While there have been agreements made on some provisions of the Act, controversial elements such as definitions remain uncertain. The EU and the US have adopted different approaches to AI regulation, and the world's first comprehensive AI regulation is still being discussed. The uncertainty surrounding the Act has created industry interest in risk assessment, compliance tools, and protective measures.