• We explored AI applications in healthcare and finance
• Healthcare: ML for imaging and risk scoring; LLMs for clinical notes, patient communication, and RAG-based Q&A
• Finance: ML for credit scoring and fraud detection; LLMs for sentiment analysis and agentic workflows
• Optum case: healthcare costs as a proxy for needs penalised Black patients
• Apple Card: unexplainable credit limits eroded public trust
• RAG reduces hallucination but inherits knowledge base biases
• Today: how are governments responding to these challenges?

Part 1: Why regulate AI?

• The case for government intervention
• Different regulatory philosophies

Part 2: The EU AI Act

• Risk-based approach
• Prohibited, high-risk, and low-risk systems
• Compliance requirements

Part 3: The US approach

• Sectoral regulation vs comprehensive laws
• Executive orders and agency guidance
• State-level initiatives

Part 4: Other approaches

• China’s AI regulations
• The global race for AI governance
• What this means for practitioners

Market failures:

• Information asymmetry: Users can’t evaluate AI systems
  • How accurate is this hiring algorithm? Nobody knows
  • Is this chatbot hallucinating? Hard to tell
• Externalities: Harms fall on people who didn’t choose to use the system
  • For instance, deepfakes harm people who never consented
• Collective action problems: Race to the bottom
  • Company A deploys unsafe AI
  • Company B must follow or lose market share

Rights and dignity:

• Some uses may violate fundamental rights
• Facial recognition in public spaces
• Manipulation of democratic processes

Innovation concerns:

• Regulation can slow development
• Compliance costs burden small companies
• May push innovation to less regulated jurisdictions

Technical challenges:

• Technology moves faster than law
• General-purpose systems defy categorisation
• Enforcement requires technical expertise

Existing laws may suffice:

• Discrimination laws already apply
• Consumer protection already exists

Timeline:

• April 2021: European Commission proposal
• December 2023: Political agreement
• March 2024: European Parliament approval
• August 2024: Entry into force
• 2025-2027: Phased implementation

Scope:

• Applies to AI systems placed on the EU market
• Covers providers, deployers, importers, distributors
• Extraterritorial reach: If you sell to the EU, you must comply
• Affects companies worldwide

Approach:

• Risk-based: Rules depend on potential harm
• Horizontal: Applies across all sectors
• Technology-neutral: Doesn’t define specific techniques

Unacceptable risk (banned):

• Social scoring by governments
• Real-time biometric identification in public (with exceptions)
• Emotion recognition in workplaces and schools
• Predictive policing based solely on profiling

High risk (strict requirements):

• Biometric identification systems
• Critical infrastructure management
• Employment and worker management
• Access to essential services (credit, insurance)
• Law enforcement and border control
• Justice and democratic processes

Limited risk (transparency only):

• Chatbots (must disclose AI)
• Emotion recognition (must inform)
• Deep fakes (must label)

Minimal risk (no requirements):

• Spam filters
• Video game AI
• Most consumer applications

If your AI system is classified as high-risk, you must:

Before deployment:

• Conduct a conformity assessment
• Establish a risk management system
• Maintain technical documentation
• Enable logging and traceability

During operation:

• Ensure human oversight capability
• Guarantee accuracy, robustness, cybersecurity
• Register in EU database
• Report serious incidents

For deployers (users of high-risk AI):

• Use according to instructions
• Ensure human oversight
• Monitor for issues
• Inform affected individuals

The Act includes special rules for foundation models like GPT-4 and Gemini.

All GPAI providers must:

• Maintain technical documentation
• Provide information to downstream deployers
• Comply with copyright law (or demonstrate exceptions)
• Publish training content summaries

“Systemic risk” GPAI (more powerful models) must also:

• Conduct model evaluations including adversarial testing
• Assess and mitigate systemic risks
• Track and report serious incidents
• Ensure adequate cybersecurity

Maximum fines:

For comparison:

• GDPR (General Data Protection Regulation) maximum: €20M or 4% turnover
• EU AI Act is stricter for the worst violations

Enforcement:

• National market surveillance authorities
• New AI Office at EU level for GPAI
• Complaints mechanism for affected individuals
• Regulatory sandboxes for testing

The US has taken a different path from the EU:

Sectoral approach:

• Healthcare AI: FDA regulates medical devices
• Financial AI: SEC, CFPB oversee lending/trading
• Employment AI: EEOC applies discrimination law
• No single AI authority

Recent developments:

• October 2023: Biden’s Executive Order on AI
• July 2025: Trump’s America’s AI Action Plan
• State-level initiatives (Colorado, California, Illinois)

Philosophy:

• Innovation-friendly compared to EU
• Voluntary commitments from companies
• Existing laws apply to AI uses

Key requirements:

• Developers of powerful AI must share safety test results with government
• Standards for red-teaming AI systems
• Guidelines for watermarking AI-generated content
• Protections against AI-enabled fraud

Focus on national security:

• Reporting requirements for large training runs
• Export controls on AI chips
• Protection of critical infrastructure

Limitations:

• Executive orders can be reversed by next president (and they were!)
• Many provisions are voluntary or guidance
• Congress hasn’t passed comprehensive legislation

The Trump administration’s approach differs from Biden’s:

Key priorities:

• American AI dominance over global competitors
• Reduce regulatory barriers to development
• Focus on national security applications
• Energy infrastructure for AI data centres
• Streamlined permitting for AI facilities

Changes from Biden era:

• Less emphasis on AI safety requirements
• More focus on competition with China
• Voluntary industry commitments over mandates
• Concern about “overregulation” slowing innovation

Implications:

• US-EU regulatory divergence may increase
• Companies face different rules in different markets
• “Race to the bottom” concerns
• Debate continues about appropriate balance

With limited federal action, states are filling gaps:

Colorado AI Act (2024):

• First comprehensive state AI law
• Requires impact assessments for high-risk systems
• Disclosure requirements for consumers

California (various bills):

• Multiple bills on deepfakes, employment AI
• Often sets national trends

Illinois:

• AI Video Interview Act: Must disclose AI in hiring

New York City:

• First US jurisdiction to require bias audits for hiring AI

China has been surprisingly active on AI regulation:

Key features:

• Content control: AI must uphold “socialist values”
• Registration requirements for public-facing AI
• Restrictions on what AI can generate
• Security assessments for new services

Contradictions:

• Regulates facial recognition but deploys it extensively
• Restricts AI manipulation but uses AI for surveillance
• Rules for companies, exceptions for government
• Innovation priorities vs content control tensions

United Kingdom:

• “Pro-innovation” approach
• Sector regulators apply existing frameworks
• No comprehensive AI law (yet)
• AI Safety Institute for frontier models

Canada:

• AIDA (Artificial Intelligence and Data Act) proposed
• High-risk system requirements
• Stalled in parliament

Brazil:

• Comprehensive AI bill in development
• Influenced by EU approach
• Rights-based framework

International coordination:

If you’re building AI systems:

• Know your use case classification under EU AI Act
• Document training data and development process
• Build in human oversight capabilities
• Plan for audits and assessments
• Consider compliance early, not as afterthought

If you’re deploying AI systems:

• Understand what system you’re using
• Ensure appropriate human review
• Inform affected individuals
• Monitor for problems
• Know your liability

If you’re affected by AI systems:

• You may have transparency rights
• Ask how decisions are made
• Challenge automated decisions
• Report problems to authorities

Where we’re heading:

• More jurisdictions will regulate AI
• Convergence likely around high-risk categories
• Interoperability challenges will persist
• Technical standards will matter more

Open questions:

• Can regulation keep pace with technology?
• What about AI systems that don’t fit categories?

Certainties:

• AI governance is here to stay
• Companies need compliance strategies
• International coordination will increase
• Affected communities will demand accountability

Why regulate?

• Market failures: information asymmetry, externalities
• Rights protection and human dignity
• Collective action problems

EU AI Act

• World’s first comprehensive AI law
• Risk-based approach with four tiers
• Strict requirements for high-risk systems
• Special rules for foundation models
• Fines up to 7% global turnover

US approach

• Sectoral regulation, no comprehensive law
• Executive orders and voluntary commitments
• State-level initiatives filling gaps
• Innovation-first philosophy

Global picture

• No international consensus
• EU likely to set de facto global standards
• China: extensive but contradictory
• UK, Canada, others developing approaches

For practitioners

• Know your use case classification
• Build compliance in from the start
• Document everything
• Plan for human oversight
• Stay informed as rules evolve