South Korea Passes AI Law

On December 26, 2024, South Korea made history by becoming the second country in the world to pass a comprehensive regulation governing artificial intelligence (“AI”). The Framework Act on the Development of Artificial Intelligence and Establishment of Trust Foundation “Act,” which will become effective on January 22, 2026, marks a significant milestone in the global AI regulatory landscape. This Act, aimed at safeguarding individuals’ rights and dignity while boosting the nation’s competitiveness, applies to AI developed or used outside South Korea if it affects the South Korean market or users.

The AI Framework Act establishes different standards for various types of AI, tailoring regulations based on their specific characteristics and potential impacts. For example, the Act distinguishes the requirements between high-impact AI and generative AI. High-impact AI is an AI system that significantly affects human life, safety, or fundamental rights. It is used in energy, healthcare, nuclear operations, biometric data analysis, public decision-making, and education. Generative AI is AI systems producing text, images, videos, or other outputs based on the structure and characteristics of the input data. Businesses must notify users in advance when providing products or services that utilize high-impact and generative AI.

For all AI systems, businesses are required to:

• Identify, evaluate, and mitigate risks throughout the AI lifecycle.
• Implement a risk management system for monitoring and responding to AI safety incidents.
• Submit the results of the above points to The Ministry of Science and ICT (“MSIT”).
• Businesses without a place of business in South Korea that meet certain thresholds for users or sales (to be later specified by presidential decree) must appoint a local representative with a South Korean address or office.

The Act includes measures to promote AI innovation through production, collection, management, distribution, and utilization of data to develop and utilize AI. These initiatives support the country’s goal of fostering competition and advancing AI technology.

MSIT may investigate suspected violations of the Act and issue orders for correction or cease-and-desist upon breach confirmation. Additionally, the Act imposes fines of 30 million won (approximately USD 20,578.41) for failure to fulfill notification requirements, designate a domestic agent, or comply with a correction/cease and desist order.

South Korea’s new AI law aims to set foundational regulations for AI use while carefully avoiding excessive regulation that could hinder innovation. The Act strikes a balance, signaling a global shift toward stricter AI regulation while supporting AI technology’s growth. Businesses leveraging AI technologies should use the one-year transition period before enforcement to prepare for the law’s requirements related to risk management, user notification, and labeling to ensure compliance.

Disclaimer

This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Hall Booth Smith, P.C. and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.