Introduction
South Korea has introduced a groundbreaking AI Basic Act, a legal framework designed to regulate AI technology while fostering innovation. This law, set to take effect in January 2026, establishes guidelines for AI governance, risk management, and ethical use. South Korea’s legislative efforts regarding AI governance emphasize ethical guidelines, safety standards, and a focus on innovation. The role of AI systems within this regulatory framework is crucial, particularly in essential sectors like healthcare and employment, where risk management plans and user notifications are necessary for high-impact AI systems.
Unlike the EU AI Act, which categorizes AI based on strict risk levels, South Korea’s approach allows for more flexibility. This ensures that companies can continue to develop AI technology while adhering to safety and transparency standards. The Act applies to high-risk AI systems, general-purpose AI models, and AI businesses operating in South Korea, requiring compliance from both domestic and foreign entities.
Overview of South Korea’s AI Law
South Korea’s AI Basic Act, passed in December 2024 and set to take effect in January 2026, represents a significant step forward in the regulation of artificial intelligence. This comprehensive legislation aims to foster the development and use of AI systems while ensuring they are safe, transparent, and accountable. The law provides a robust framework for AI governance, emphasizing risk management, human oversight, and ethical considerations.
Unlike other global AI regulations, such as the EU AI Act, South Korea’s approach is designed to be flexible and innovation-driven. This allows AI developers to continue advancing AI technology while adhering to essential safety and transparency standards. The AI Basic Act applies to both domestic and foreign entities operating within South Korea, ensuring a broad scope of compliance.
Key Objectives of the AI Basic Act
The law is designed to:
Ensure trustworthy AI development by enforcing ethical AI design principles, conducting risk assessments, and establishing clear governance frameworks as outlined in South Korea’s AI Basic Act.
Protect data privacy by integrating elements from the Personal Information Protection Act (PIPA) and ensuring that AI systems do not compromise sensitive data. AI systems play a crucial role in safeguarding data privacy by implementing robust security measures.
Foster innovation by encouraging AI developers to create responsible and beneficial AI applications while maintaining accountability.
Regulate AI governance across multiple sectors, including high-impact AI operators in finance, healthcare, transportation, and public services.
Promote human oversight in AI decision-making processes to prevent unintended consequences and mitigate risks associated with AI automation.
Key Definitions and Concepts
The AI Basic Act introduces several key definitions that are crucial for understanding the scope and application of the law. Artificial intelligence (AI) is defined as “an electronic implementation of intellectual capabilities that humans possess.” This broad definition encompasses various forms of AI technology, from simple algorithms to complex machine learning models.
AI systems are defined as systems that utilize AI to perform specific tasks, ranging from data analysis to decision-making processes. Generative AI, a subset of AI systems, refers to those capable of creating new content, such as text, images, or videos. These definitions are essential for delineating the types of AI technologies covered by the law and ensuring that all relevant AI applications are subject to appropriate regulatory oversight.
Core Principles and Obligations
The AI Basic Act introduces several key requirements for organizations to ensure compliance:
1. Domestic Representative Requirement
AI providers must appoint a local representative in South Korea to ensure compliance with legal obligations.
This representative will act as the main point of contact for regulatory oversight, ensuring AI systems adhere to South Korea’s AI governance framework.
2. Risk Management System
AI developers must implement comprehensive risk management systems that identify, evaluate, and mitigate potential AI-related risks.
Regular risk assessments must be conducted, especially for high-risk AI applications, to minimize security risks and ethical concerns.
AI outputs must be explainable and verifiable, allowing users to understand the basis of AI-generated decisions.
Developers must proactively address potential risks that could impact human rights, privacy, and security.
3. Transparency and Documentation
Organizations must maintain detailed records of the following:
AI training processes, including data sources and methodologies.
Data assets, including structured and unstructured data used to develop AI models.
Ethical considerations applied during AI development to align with South Korea’s AI policy and legal framework.
AI-generated content must be labeled, and user notifications must be provided when AI interacts with consumers.
Organizations must ensure that AI decisions affecting human life, fundamental rights, and public services are transparent and accountable.
Who Does This Law Apply To?
South Korea’s AI Basic Act applies to all AI activities affecting the South Korean market, including:
Domestic and foreign AI developers creating AI models, applications, and systems for use in South Korea.
Organizations utilizing AI technology in business operations, particularly those dealing with high-risk AI applications.
High-impact AI operators involved in finance, healthcare, transportation, and public services.
Exemptions:
AI developed exclusively for national defense or security is exempt from the law.
The law provides a one-year transition period before full enforcement, allowing businesses to adapt to compliance requirements.
Compliance Requirements
Organizations must:
Establish risk management protocols to proactively identify and mitigate AI-related threats.
Maintain detailed documentation of AI development processes, ensuring transparency and accountability.
Implement user notification systems to inform individuals when they interact with AI-driven services or content.
Ensure AI outputs align with ethical principles, human oversight, and regulatory standards.
Adhere to data protection laws, such as the Personal Information Protection Act (PIPA), to safeguard user privacy and personal data.
Monitor security risks related to AI systems and update risk management frameworks as AI technology evolves.
Implementation and Operationalization
The AI Basic Act mandates that AI developers establish comprehensive risk management systems to ensure the safe and reliable development of AI systems. This includes conducting regular risk assessments, particularly for high-risk AI applications, to identify and mitigate potential threats. Transparency and explainability are also critical components, requiring developers to provide clear information on how AI systems are developed and how they make decisions.
Human oversight is another fundamental requirement, ensuring that AI systems are used in ways that respect human rights and dignity. This involves implementing mechanisms for human intervention in AI decision-making processes to prevent unintended consequences.
The law also sets forth guidelines for data protection, requiring AI developers to obtain consent from individuals before collecting and using their personal data. AI systems must be designed with security and ethical considerations in mind, ensuring they do not compromise user privacy or fundamental rights.
To oversee compliance, the AI Basic Act establishes a regulatory body responsible for monitoring AI development and deployment. This body will provide guidance and support to AI developers, ensuring they adhere to the law’s requirements and promoting the safe and responsible use of AI technology.
Overall, South Korea’s AI Basic Act offers a comprehensive framework for AI governance, balancing the need for innovation with the imperative of establishing trustworthy AI systems. By adhering to these regulations, businesses can ensure their AI technologies are ethical, transparent, and aligned with global standards.
How Compliance is Enforced
The Ministry of Science and ICT, which plays a crucial role in overseeing technological advancements and ensuring compliance within the sector, will take on the responsibility of supervising compliance activities. This initiative is aimed at guaranteeing that all businesses adhere strictly to the guidelines and regulations outlined in the AI Basic Act. To effectively monitor these regulations, regulatory authorities will engage in comprehensive audits and thorough inspections designed to meticulously assess AI systems. They will evaluate not only the overall functionality of these systems but also their conformity to established legal standards designed to protect public interest and safety. In addition to these proactive measures, it is imperative that any incidents related to artificial intelligence, particularly those that could impact essential human rights or lead to unintended harm, are to be reported immediately. Timely reporting of such occurrences is critical in order to facilitate swift investigations and corrective actions, ensuring the integrity and ethical application of AI technologies within our society.
Penalties for Non-Compliance
Fines related to violations of regulations governing artificial intelligence can reach significant amounts, potentially escalating to as much as KRW 30 million, which is approximately equivalent to $20,870. This substantial financial repercussion highlights the stringent nature of these regulations. Furthermore, businesses operating within the artificial intelligence sector face serious repercussions, such as the suspension or even complete revocation of their operating licenses if they fail to comply with the established requirements concerning transparency and effective risk management practices. In the most severe instances of regulatory breaches, mainly when artificial intelligence technologies are misappropriated or cause harm due to negligence, individuals found responsible may face punitive measures, including imprisonment. These regulations ensure that the AI sector operates within ethical and responsible boundaries.
Comparison with the EU AI Act
Aspect
South Korean AI Basic Act
EU AI Act
Approach
Flexible, innovation-driven
Risk-based, stringent
Risk Classification
High-risk & general AI models
Categorizes AI into risk levels
Compliance Period
One-year transition phase
Immediate enforcement
Penalties
Fines, license revocation, imprisonment
High fines, market bans
Implementation Timeline
The AI Basic Act will be implemented in multiple phases:
2024-2025: Organizations prepare for compliance by updating AI governance models and risk management frameworks.
January 2026: Full enforcement of transparency, risk management, and compliance obligations begins.
Ongoing regulatory reviews: The law will be updated as the AI industry evolves to address emerging legal challenges and technological advancements.
How Businesses Can Prepare
Organizations should take the following steps to align with the new regulatory landscape:
Short-Term Actions (2024-2025)
Conduct internal audits of AI systems to assess risk levels and compliance readiness.
Appoint a domestic representative to oversee compliance and regulatory obligations.
Implement risk management strategies and transparency mechanisms.
Update AI policies to align with South Korea’s AI governance framework.
Long-Term Strategies (Beyond 2026)
Establish a dedicated AI compliance team to monitor regulatory developments and ensure ongoing adherence.
Train employees on AI ethics, compliance obligations, and legal requirements.
Collaborate with regulatory agencies and participate in discussions on AI governance.
Stay informed about global AI regulations, including developments in the EU AI Act and other jurisdictions, to maintain international compliance.
Conclusion
South Korea’s AI Basic Act represents a significant milestone in AI regulation, setting a high standard for responsible AI deployment. By balancing innovation with accountability, the law ensures AI technology remains ethical, transparent, and beneficial to society.
Organizations must take proactive steps to align their AI strategies with the new regulations, ensuring compliance while fostering AI development and competitiveness. As the AI industry continues to evolve, regulatory oversight will play a crucial role in shaping the future of AI governance.
By understanding and adapting to this new legal framework, businesses can thrive in a rapidly evolving AI-driven world while maintaining ethical and legal integrity.
