What Happens if You Break the Rules?
Pete Hannam
Data and AI Systems Architect
What's the worst that could happen if you break the rules? Click and find out!
What's the worst that could happen if you break the rules? Click and find out!
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What Happens if You Break the Rules?
1 min 1 sec
Key learning objectives:
Outline the financial consequences of non-compliance with the Act
Identify other consequences authorities can take
Overview:
There are substantial finance and reputational consequences for failing to comply with the EU AI Act.
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Summary
What are the financial consequences of non-compliance with the Act?
The financial penalties for breaking the rules of the AI Act are structured into two main tiers based on the severity of the breach. The highest fines are reserved for the most serious violations, specifically for:
The financial penalties for breaking the rules of the AI Act are structured into two main tiers based on the severity of the breach. The highest fines are reserved for the most serious violations, specifically for:
- Using prohibited AI practices.
- Failing to comply with data governance requirements for systems that are classified as high-risk.
In these instances, organisations can face fines of up to €35 million or 7% of their global annual turnover, depending on whichever amount is higher.
For other types of non-compliance, the financial impact remains significant but is set at a lower threshold. This tier applies to cases such as:
For other types of non-compliance, the financial impact remains significant but is set at a lower threshold. This tier applies to cases such as:
- Failing to meet transparency obligations
- Providing incorrect or misleading information to regulators
- Failing to co-operate with the relevant authorities
For these breaches, fines can reach up to €15 million or 3% of global annual turnover, again applying whichever figure is higher.
What other consequences can authorities take?
Beyond direct financial penalties, authorities have the power to take several other enforcement actions to ensure the safety and legality of AI systems. If a system is found to be non-compliant, regulators can order its withdrawal from the market. In more severe cases, they can even issue temporary or permanent bans, effectively preventing the system from being used or sold at all. Another significant consequence is that authorities can choose to make enforcement actions public. This means that any failure to comply could lead to public disclosure, which may impact an organisation's reputation. These measures are designed to ensure that all AI systems operating within the market meet the required standards for safety and transparency.
What other consequences can authorities take?
Beyond direct financial penalties, authorities have the power to take several other enforcement actions to ensure the safety and legality of AI systems. If a system is found to be non-compliant, regulators can order its withdrawal from the market. In more severe cases, they can even issue temporary or permanent bans, effectively preventing the system from being used or sold at all. Another significant consequence is that authorities can choose to make enforcement actions public. This means that any failure to comply could lead to public disclosure, which may impact an organisation's reputation. These measures are designed to ensure that all AI systems operating within the market meet the required standards for safety and transparency.
Subscribe to watch
Access this and all of the content on our platform by signing up for a 7-day free trial.
Pete Hannam
Pete Hannam has over twenty years’ experience building large-scale data platforms, including those that now underpin modern AI systems. His work has ranged from national security infrastructure processing hundreds of billions of records to global enterprise platforms supporting tens of thousands of users. He has architected AI-ready systems for government, consultancies, and enterprises, with a strong focus on governance, security, and regulatory compliance. His work emphasises that successful AI deployment depends not only on technology, but on understanding the organisational, technical, and regulatory context that enables AI initiatives to deliver real value.
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