The European Union’s groundbreaking artificial intelligence law officially took effect on Thursday, marking a significant milestone in global AI regulation. The legislation is designed to foster innovation while safeguarding citizens’ rights.

Earlier this year, the EU adopted these comprehensive rules, which specifically address advanced AI systems like OpenAI’s ChatGPT, following extensive negotiations. Initially proposed in 2021, the urgency for these regulations intensified after the rise of generative AI, notably with ChatGPT’s ability to produce human-like text within seconds.

Other notable generative AI tools include Dall-E and Midjourney, which can create images in various styles from simple textual prompts. European Commission President Ursula von der Leyen emphasized the importance of the new legislation, stating, “With our artificial intelligence act, we create new guardrails not only to protect people and their interests but also to give businesses and innovators clear rules and certainty.”

While companies have until 2026 to comply with the regulations, specific rules governing AI models like ChatGPT will take effect 12 months after the law’s implementation. Additionally, strict bans on using AI for predictive policing based on profiling and on systems that use biometric data to infer race, religion, or sexual orientation will be enforced six months post-implementation.

The law, referred to as the “AI Act,” adopts a risk-based framework, imposing stricter obligations on high-risk systems to ensure the protection of citizens’ rights. The level of risk associated with a system will dictate the extent of companies’ responsibilities to mitigate potential harm.

“The geographic scope of the AI Act is very broad, so organizations with any ties to the EU in their business or customer base will need an AI governance program to identify and meet their obligations,” noted Marcus Evans, a partner at law firm Norton Rose Fulbright.

Companies that fail to adhere to the prohibitions or data obligations outlined in the law could face fines of up to seven percent of their global annual revenue. To oversee compliance with these new regulations, the EU established an “AI Office” in May, staffed with tech experts, lawyers, and economists.