How Financial Entities Can Stay Compliant Under the EU AI Act

Artificial intelligence (AI) is transforming financial services, offering new ways to enhance compliance, detect fraud, and improve customer interactions. As AI adoption grows, however, so do regulatory challenges. One approach to deal with this is the EU AI Act, which makes it essential for financial entities relying on AI-driven tools to be aware of their new obligations. 

In this article, we discuss what the EU AI Act is all about and explore its impact on compliance in the financial sector. 

A short summary of the EU AI Act 

The European Union Artificial Intelligence Act is the first comprehensive legal framework governing AI. It introduces strict requirements for AI systems offered within the European Union to ensure they are transparent, ethical, accountable, and safe to use. 

Following a risk-based approach, the EU AI Act classifies AI applications into four categories: 

• Unacceptable risk  

• High risk 

• Limited risk 
• Minimal risk 
  
  

The regulations an AI system must follow depend on its assigned risk category. While the EU AI Act was enforced on August 1, 2024, its full applicability begins on August 2, 2026, with some provisions taking effect earlier. 

How does the EU AI Act impact the financial industry? 

While providers of AI systems are primarily responsible for complying with the act, financial institutions also have obligations, particularly when outsourcing AI-powered services. National authorities will oversee compliance, and failure to meet regulatory requirements can result in heavy fines. Therefore, financial institutions must take proactive steps to assess their AI system providers, enhance governance, and align with sector-specific regulations.