The government is pushing forward draft bills that would impose strict financial penalties on anyone using prohibited artificial intelligence practices, as part of a new national governance framework designed to align Cyprus with EU AI regulation.
New governance framework
The draft bills, now open for public consultation, set out a national governance framework, including the designation of competent authorities and their respective powers. They also establish a market surveillance and oversight framework, along with the powers competent authorities will need to enforce it.
The bills also set out the procedures and mechanisms needed to implement the EU regulation. They provide for a compliance and enforcement framework that includes administrative fines. They also create an AI Regulatory Sandbox to support responsible innovation, along with the additional national provisions needed to apply the EU rules.
Commissioner named as competent authority
Under the government’s proposal, the Artificial Intelligence Regulation Directorate would fall under the Commissioner of Electronic Communications. The plan includes setting up the Directorate within the Commissioner’s office to support the Commissioner’s powers under the regulation.
The Directorate would be integrated into the office’s institutional, administrative, organisational and financial structure, ensuring it can exercise its powers effectively and has access to the resources it needs.
Inspections and fines
Competent authorities will be able to report serious incidents involving breaches of the EU regulation to the Commissioner of Electronic Communications, who will act as the single point of contact for all such incidents.
Authorities will have the power to demand and obtain financial and technical information from individuals and companies. They will also be able to carry out inspections at premises where a violation is suspected to have occurred and summon witnesses.
If a breach of the EU regulation is found, authorities will impose administrative sanctions and other administrative measures. These include a written warning and a recommendation to correct the violation and take corrective measures within a set timeframe.
AI systems will be withdrawn to prevent their availability on the market, while systems will also be recalled, including through deactivation and return to the provider.
A fine of €30,000 will apply for any non-compliance with the regulation’s provisions, rising to €60,000 for a repeat violation.
For prohibited AI practices, fines will range from €7.5 million to €35 million.
