How Does the EU AI Act Affect Businesses?

The EU AI Act affects how businesses develop, deploy, and manage AI, with implications that reach far beyond Europe. Any company whose AI systems interact with EU users or process EU data is subject to the regulation, regardless of where it is headquartered, making compliance a global concern.

The Act introduces detailed obligations for providers of AI systems, including requirements for transparency, traceable documentation, risk assessment, incident reporting, and ensuring that staff understand how AI systems operate and their limitations. Certain uses of AI are outright prohibited, particularly those deemed to pose unacceptable risks, such as social scoring, real-time biometric identification in public spaces, and systems that manipulate behaviour or exploit vulnerabilities.

High-risk sectors such as healthcare, finance, recruitment, manufacturing, and education face additional responsibilities, including human oversight, bias mitigation, and registration in official EU databases before market entry. Non-compliance carries severe financial penalties, which can reach tens of millions of euros or a percentage of global turnover, emphasising the critical importance of proactive adaptation.