AI Regulation: A New Era of Compliance Begins

March 1, 2025. That’s when the new AI regulations from the Biden administration take effect, introducing a sweeping framework designed to govern the use of artificial intelligence across various sectors.

The Federal Register outlines that the regulation mandates organizations using AI technologies to comply with strict guidelines aimed at ensuring transparency, accountability, and fairness in AI systems. This is a significant shift, especially for tech companies that have long operated in a largely unregulated environment.

Under the new rules, businesses will need to conduct impact assessments before deploying AI systems, evaluate potential biases in their algorithms, and provide clear documentation of their AI functionalities. Compliance guidance states that these assessments must be submitted to federal agencies for review, ensuring that they meet the established ethical standards.

The regulation requires that non-compliance can result in hefty penalties—up to $20 million per violation. This financial risk is expected to compel organizations to prioritize compliance, especially as enforcement mechanisms are bolstered by a new federal task force dedicated to monitoring AI usage.

Who is covered by these regulations? The ruling specifies that any organization—public or private—using AI technologies in their operations will be subject to these requirements. However, there are exemptions for small businesses with fewer than 50 employees, recognizing the disproportionate burden regulations can place on smaller entities.

The implications of this regulation extend far beyond just corporate compliance; they are set to impact everyday citizens as well. By mandating accountability and transparency, the regulations aim to protect individuals from the potential harms of biased or opaque AI systems, such as discriminatory lending practices or misidentifications in law enforcement.

As the compliance deadline approaches, organizations are urged to begin preparations now. With the regulatory landscape shifting dramatically, those who wait until the last minute risk falling into the pitfalls of non-compliance.

### What we’re watching next in other sectors:

Impact Assessments: Monitoring how organizations implement and conduct these assessments will be crucial for understanding compliance levels.

Penalties and Enforcement: Observing how federal agencies enforce penalties will provide insights into the effectiveness of the regulation and its deterrent impact on non-compliance.

Small Business Exemptions: It will be interesting to see how exemptions for small businesses are defined and the potential push for additional support or guidance.

Bias Mitigation Strategies: The effectiveness of strategies employed by companies to mitigate bias in AI systems will be a key area to monitor.

Public Perception: Understanding how the public responds to these regulations, particularly in terms of trust in AI systems, will shape future policy decisions.

Sources

Federal Register - AI

EFF Updates

NIST News