Whether you’re an organisation using AI-driven chatbots for customer enquiries, developing predictive algorithms for credit risk, or image recognition software for security purposes, the upcoming legal obligations of deploying certain artificial intelligence (AI) technologies under the EU’s landmark AI Act may severely impact your data handling practices. A team of experts in data protection services and AI governance have penned the following article to help businesses understand the requirements of the AI Act, as well as what will be required of your organisation in order to achieve compliance.

What is the AI Act?

The AI Act establishes a regulatory and legal framework for the deployment, development and use of AI systems within the EU. The legislation takes a risk-based approach, categorising AI systems according to their potential impact on safety, human rights and societal well-being. Some systems are banned entirely, while systems deemed ‘high-risk’ are subject to stricter requirements and assessments before deployment. AI systems are categorised into different risk levels based on their potential impact, with the burden of compliance increasing proportionate to the risk. The three main categories are prohibited, high risk and low risk. Prohibited systems are banned entirely, due to the unacceptable potential for negative consequences. High risk systems are those with a significant impact on people’s safety, wellbeing and rights. They are allowed, but are subject to stricter requirements. Low risk systems are those which pose minimal dangers, and therefore have fewer compliance obligations.

How will the AI Act and the GDPR work together?

“In many cases the AI Act and the GDPR will complement each other,” comments one UK-based data protection specialist. “The AI Act is essentially a product safety legislation designed to ensure the responsible and non-harmful deployment of AI systems. The GDPR is a principles-based law, protecting fundamental human privacy rights.”

Where are we at the moment?

The AI Act was approved by the European Council on 21 May 2024, with a phased implementation schedule over two years, which has been designed to give organisations time to make necessary changes to their systems and practices. The Act will apply to public and private organisations operating within the EU that develop, deploy, or use AI systems within the EU’s single market. This includes companies, institutions, government bodies, research organisations and any other organisations involved in AI-related activities.

When will the AI Act apply?

The AI Act’s finalised text will be published in the Official Journal of the European Union, officially entering into force twenty days after publication – expected by late June or early July 2024. The new law will then apply two years later, in 2026. The EU Commission has also established the EU AI Office. From 16 June 2024, the AI Office will support the implementation of the AI Act across all Member States.

Timeline and important deadlines

The AI Act becomes law (expected late June to early July 2024) 6 months later AI practices with unacceptable risks to health and safety or fundamental human rights will be banned. The deadline for compliance on unacceptable risk AI systems is, understandably, one of the first to be enforced, so organisations should evaluate their risk exposure in this area as soon as possible. 9 months later The AI Office will finalise the codes of conduct to cover the obligations for developers and deployers of AI systems. These codes will provide voluntary guidelines for responsible AI development and use. 12 months later The rules for providers of General Purpose AI (GPAI) will come into effect and organisations must align their practices with these new rules. “GPAI” refers to advanced AI systems capable of performing a wide range of tasks – ChatGPT being one such example. In addition, the first European Commission annual review of the list of prohibited AI applications will also take place 12 months after the AI Act enters into force. 18 months later The European Commission will issue implementing acts for high-risk AI providers. This means organisations using high-risk AI systems must follow a standard template to monitor the AI systems after deployment. The monitoring plan will help to ensure that any issues or risks are promptly identified and addressed. 24 months later The remainder of the AI Act will apply, including regulations on high-risk AI systems listed in Annex III of the AI Act. These systems include those related to biometrics and include technologies such as fingerprint recognition, facial recognition, iris scanning and voice authentication. 36 months later Regulations for high-risk AI systems stipulated in Annex I become effective.

Conclusion

The AI Act represents a substantial legislative shift for organisations that use artificial intelligence in the EU, and organisations must plan for severe criteria and assessments, especially for systems posing a high risk. As the AI landscape continues to develop, staying informed and adaptable will be key for businesses to continue harnessing AI’s potential while adhering to new legal obligations.

Banner Jones, in collaboration with Mitchells Accountants, has advised Peak Sensors Holdings on its recent £2.4 million sale to SDI Group plc. SDI Group plc, quoted on AIM, specialises in the design and manufacture of scientific and technology products for digital imaging and sensing and control applications. This acquisition expands its portfolio and capabilities. Peak Sensors, a leading UK manufacturer based in Chesterfield, produces standard and bespoke temperature sensors, including thermocouples and resistance thermometers, servicing various industries such as glass, ceramics, incinerators (including energy from waste), cement and ovens. With a 5,300 sq ft leasehold facility and 14 employees, Peak Sensors reported revenues of £2.1 million for the year ending March 31, 2023. Further to the acquisition Roshan Aucklah, CEO of Peak Sensors since 2017, will continue to lead the business under SDI Group ownership. Peter Smith, one of the founders, will remain as a consultant. Peak Sensors will now be part of SDI Group’s Sensors and Controls division. Andrew Fielder, Solicitor and Head of Business Legal Services at Banner Jones, said: “It was a real pleasure to support Peak Sensors in an acquisition deal that will enhance and drive the company’s success. We are also pleased to have worked again with Mitchells Accountants to support another local Chesterfield business.” Ken Ford, Chairman of SDI, said: “The acquisition of Peak Sensors is a strategic step in our Group growth, demonstrating opportunities to acquire businesses with high-quality products and export growth potential. We expect the acquisition to be earnings-enhancing in the first full year of ownership. We are delighted to welcome Roshan Aucklah, Peter Smith, and their staff to the SDI Group.”

East Midlands Chamber, in partnership with Destination Chesterfield, hosted a General Election hustings event in Chesterfield with candidates from all major parties invited to take part. A number of business representatives attended the session on 20th June at East Midlands Chamber’s Chesterfield offices. In conventional hustings format each candidate was given a restricted and equal amount of time to respond to questions from the audience. In alphabetical order the candidates that participated were: David Kesteven – Green Party candidate for Bolsover Helen Wetherall – True and Fair candidate for the Derbyshire Dales Lee Rowley – Conservative candidate for North East Derbyshire Toby Perkins – Labour candidate for Chesterfield East Midlands Chamber Director of Policy and Insight Richard Blackmore, who presented the session, said: “With the clock ticking and now only a couple of weeks until people cast their ballot, the hustings was a fantastic opportunity for people to ask whatever burning questions they had directly to each of the candidates about what they would do for the region’s economy and growth should their party get elected. “It was good to see such good turn out with plenty of questions for the candidates, at such a critical time as people decide who they believe might best represent their interests.”

Turnover of the top 500 companies in the East Midlands has risen by more than 18% year on year to £97bn, a new report reveals. The annual East Midlands Top 500 Companies Index celebrates the contribution which the region’s biggest companies make to the economy – and this year marks a milestone as the EM Top 500 reaches its fifth anniversary. The 2024 index was launched last night (June 20) at the East Midlands Chamber annual dinner by Professor David Rae, of De Montfort University Leicester (DMU), who leads the research team which meticulously compiles the index, in partnership with colleagues at University of Derby and Nottingham Trent University. It is supported by East Midlands Chamber and Cross Productions. Top of the list for the fifth year running was Boots, the Nottingham-based health and beauty company, which recorded £7,467,000, although this was down from 2023’s £7,803,000. Derbyshire car supermarket company Motorpoint entered the Top 10 for the first time after seeing turnover reach a record £1.3bn. There were 84 new entrants on the list, compared to 97 who made the list for the first time in 2023. Top new entrants were employability firm Maximus UK, of Leicestershire, which entered at number 78, and Atten Group, an IT company based in Derby, which was placed at number 135. Highest climber was housebuilder Stonewater Developments which rose 295 places from 411 in 2023 to 116 in 2024. David Rae, Professor of Enterprise at DMU, said: “The East Midlands Chamber has been a supporter of the EM Top 500 since its inception, so we were delighted to be able to present the first findings of 2024 at its President’s Awards Dinner in front of leaders of major companies in the region. “With five years of data capturing substantial shifts in the regional economy and an in-depth Sectoral Analysis, we are eager to utilize this information to guide the future growth of the East Midlands economy. “The advent of the new East Midlands Mayor and Combined Authority, the East Midlands Freeport, the anticipated election of a new group of MPs representing the East Midlands, and other strategic initiatives signal a promising outlook for the region’s prosperity.” The index is compiled using Companies House data filed for the period between 1 July 2021 and 30 June 2022, including turnover and employment. This includes part of the COVID and recovery period. The number of people employed at the top 500 companies fell 1.4% from 434,348 in 2023 to 440,230 in 2024. Among the top 10 companies, while revenue grew 12.7% on 2023, staffing levels were down 11%. Richard Blackmore, the Chamber’s head of special projects, said it was reassuring to see East Midlands industry continuing to drive growth in the UK economy. He said: “The region has been through a tough few years so it is good to see businesses on the list thriving. Their success creates employment and growth for the regional and national economy and continues to highlight the East Midlands as a place to do business. “Many of the businesses on the list are Chamber members, playing their role in supporting and raising the profile of the region we work and live in. I would like to thank De Montfort University, the University of Derby and Nottingham Trent University for the huge amount of effort which goes into compiling this valuable resource.”