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How the EU AI Act Impacts Swiss Businesses: What You Need to Know

The European Union’s Artificial Intelligence (AI) Act is a regulatory framework designed to address the risks and challenges posed by AI technologies. Though Switzerland is not part of the EU, businesses in Switzerland, particularly those with ties to the EU market, should not dismiss the potential impacts of this regulation. The AI Act has significant implications for Swiss companies involved in AI development, deployment, or the provision of AI-based services. But why should Swiss businesses care? Here’s why this regulation demands your attention and what you can do to prepare.

The EU AI Act: What Is It?

The EU AI Act aims to regulate the development, deployment, and use of AI technologies within the EU, with the primary goal of ensuring the safety and rights of individuals while fostering innovation. It introduces a risk-based classification system for AI systems and sets out compliance obligations for different categories of risk, from minimal risk to high-risk AI systems.

At its core, the AI Act ensures that AI applications which could impact safety, privacy, or fundamental rights are subject to stringent oversight. For example, AI systems used in critical sectors like healthcare, transportation, or hiring are classified as “high-risk” and must comply with detailed requirements regarding transparency, accountability, and testing.

Why Should Swiss Companies Care?

  • Access to the EU Market: Swiss businesses, especially those in the technology, finance, healthcare, and e-commerce sectors, are likely engaged with EU clients or users. The AI Act has a far-reaching territorial scope: any AI system used within the EU must comply with the AI Act, regardless of where the developer or provider is based. This means that if your Swiss company offers AI-driven products or services to EU customers, you may find yourself legally obligated to adhere to these rules, or risk losing access to the EU market.
  • Legal and Financial Risk Mitigation: The EU AI Act imposes strict penalties for non-compliance, particularly for high-risk AI systems. Fines can be substantial, reaching up to €35 million or 7% of global turnover, depending on the breach. For Swiss companies supplying high-risk AI systems to the EU market, this could result in significant financial and legal liabilities.
  • Data Governance and Cross-border Data Transfers: The AI Act also addresses the ethical and legal handling of data, particularly personal data. Since many Swiss companies operate in international markets, they likely deal with data from EU citizens. The AI Act aligns with the EU’s General Data Protection Regulation (GDPR) and imposes additional rules on AI systems related to data use, especially when it comes to consent, data minimisation, and transparency.
  • Future-Proofing Your Business Strategy: The EU AI Act is likely to set the tone for AI regulation globally. While the regulation applies to the EU, it is anticipated that other regions may adopt similar frameworks in the future. By preparing for compliance now, Swiss businesses can future-proof themselves against coming regulations, not only in the EU but worldwide.

What Can Swiss Companies Do Now?

  • Conduct AI Risk Assessments: Review your current AI systems and assess whether they fall under high-risk categories as defined by the AI Act. High-risk AI systems must meet stricter standards for testing, transparency, and human oversight. A thorough audit of your AI applications will help you understand what changes or updates need to be made to ensure compliance.
  • Develop Data Management Practices: Implement or enhance data governance protocols, ensuring that AI systems comply with requirements related to data minimisation, protection, and consent. Make sure your processes align with both the AI Act and the GDPR, particularly when handling personal data from EU citizens.
  • Invest in Transparency and Accountability: High-risk AI systems require a higher degree of transparency and accountability. Ensure that your AI systems are explainable and that you can demonstrate their compliance with the regulation’s requirements for fairness, non-discrimination, and safety.
  • Stay Informed and Involve Experts: The AI regulatory landscape is still developing, and the AI Act is subject to updates and further interpretation. Staying informed about regulatory developments and engaging with legal or compliance experts will be essential to ensure ongoing compliance as the rules evolve.

Take Action

Whether your company is already operating in the EU, working with EU clients, or handling data from EU citizens, the implications of the EU AI Act are significant and could be costly if overlooked. Compliance with the AI Act can help mitigate financial and legal risks, build trust with clients, and future-proof your business in an increasingly regulated global landscape. Taking a proactive approach to understanding and preparing for this regulation is a smart business strategy that can reduce the cost and impact of non-compliance. Schedule a complimentary 20-minute call with our expert legal team today and ensure your business is on the right track for the future.

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Anna Levitina

Partner

anna.levitina@loganpartners.com

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