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Time Business News
30 minutes ago
- Time Business News
EU AI Office Issues Next Guidance on Foundation Models, Downstream Compliance Strategies
Vancouver, Canada — The European Union's AI Office has published its most detailed guidance yet on the regulatory expectations for foundation models under the EU Artificial Intelligence Act (AI Act), marking a pivotal moment in the staged rollout of the bloc's sweeping AI framework. The guidance, aimed at both upstream developers and downstream deployers, clarifies that compliance responsibilities extend through the entire AI value chain, with an emphasis on high-risk applications such as identity verification, Know Your Customer (KYC) processes, fraud detection, and biometric authentication. While foundation models have been widely celebrated for their adaptability and efficiency, the EU AI Office has made it clear that their general-purpose nature is no excuse for regulatory gaps. Whether these models are developed by a major U.S. tech firm, an EU-based AI lab, or an open-source consortium, any deployment in high-risk contexts within the EU will be subject to strict performance, transparency, and governance obligations. The AI Office's latest guidance is particularly significant for regulated industries, where downstream services integrate foundation models into decision-making processes that affect individuals' legal rights, financial access, or physical security. In these scenarios, compliance is not just a matter of upstream assurances; it requires active oversight and testing by downstream deployers. Understanding the EU's Regulatory Position on Foundation Models Foundation models are large-scale, pre-trained AI systems that can be adapted for a wide range of applications. They form the backbone of many downstream services, from automated loan assessments to biometric border controls. Under the AI Act, the developers of these models must meet transparency and documentation requirements. Still, the deployers who adapt them for specific purposes, particularly in high-risk sectors, must conduct their risk assessments, conformity checks, and monitoring. The EU AI Office has now formally stated that compliance is a shared responsibility: upstream developers cannot 'wash their hands' of downstream risks, and downstream deployers cannot rely solely on vendor claims of compliance. This shared responsibility framework is intended to close loopholes where responsibility could otherwise be passed between parties, leading to gaps in oversight. It mirrors principles in other EU regulatory frameworks, such as GDPR's joint controller obligations. It is expected to fundamentally change how AI model procurement, integration, and lifecycle management are approached in the EU market. Key Elements of the New Guidance 1. Mandatory Technical Documentation Transfer Developers must provide downstream deployers with detailed information about a foundation model's architecture, training methodology, dataset sources, risk profiles, and performance metrics across relevant demographic groups. Downstream deployers must keep these records, adapt them to their operational context, and include them in their conformity assessment filings. 2. No Liability Laundering Through Contracts While contracts may allocate operational responsibilities, they cannot eliminate legal obligations under the AI Act. Both parties remain directly accountable to regulators. 3. Context-Specific Testing Requirements Even if a foundation model has been tested by its developer, downstream deployers must test it under real-world conditions relevant to their application. For example, a model used for verifying ID documents must be tested with authentic local document types, lighting conditions, and demographic variations. 4. Continuous Monitoring and Drift Detection Deployers must monitor for model drift (changes in performance over time), especially when models are updated or retrained by the upstream developer. 5. Public AI Database Registration High-risk deployments of foundation models must be listed in the EU's public AI database, including details on both upstream and downstream entities. Sector-Specific Compliance Implications Financial Services Banks using AI-driven fraud detection or credit scoring models must integrate AI governance checks into their vendor risk management processes. Procurement teams will need to request complete compliance documentation and ensure that models are tested for fairness, explainability, and reliability under operational conditions. Identity and KYC Providers These providers are in the direct path of enforcement, as identity verification is a designated high-risk use case. A KYC platform adapting a foundation model for biometric face matching will need to run localized accuracy tests, integrate human-in-the-loop reviews for borderline cases, and ensure that demographic bias is eliminated or mitigated. E-Commerce Platforms using AI to verify seller identities, detect counterfeit goods, or flag fraudulent transactions must confirm that the models they use meet the AI Act's transparency and testing requirements. Border and Travel Security Government agencies and airlines using foundation models for passenger verification must confirm that systems work reliably across all demographic groups, avoid over-reliance on a single vendor's performance claims, and maintain independent audit logs. Case Study 1: Cross-Border Banking and Shared Liability A large EU-based bank uses a biometric verification service that incorporates a U.S.-developed foundation model. The bank's vendor provides a compliance statement. Still, under the new guidance, the bank must independently validate the model's accuracy and fairness in its operational environment, including for customers in rural EU regions whose identity documents may be older or less machine-readable. Case Study 2: E-Commerce Fraud Detection A central e-commerce platform integrates a foundation language model to scan communications between buyers and sellers for scam patterns. While the upstream developer provides a list of known biases and error rates, the platform must conduct its testing to ensure that cultural and linguistic differences across EU member states do not lead to false positives that unfairly penalize legitimate sellers. Strategic Recommendations from Amicus International Consulting For Downstream Deployers Maintain a Model Registry — Track all foundation models in use, their origins, versions, and compliance documentation. Integrate AI Governance into Procurement — Require AI Act compliance proof as part of vendor onboarding. Test Locally, Not Just Globally — Conduct independent testing tailored to your operational jurisdiction and demographic profile. Create Feedback Loops — Develop processes that enable customers and end users to challenge or appeal AI-driven decisions. For Upstream Developers Standardize Documentation — Provide a compliance packet for downstream partners containing all required technical and risk information. Support Downstream Testing — Offer tools and datasets to help deployers run localized performance checks. Communicate Updates Proactively — Notify downstream clients when retraining or model updates could alter compliance status. Geopolitical and Competitive Context The EU's foundation model guidance is part of a broader trend in global AI regulation. The U.S. and UK are focusing on voluntary frameworks, while Singapore and Canada have begun shaping mandatory compliance rules. However, none currently match the AI Act's enforceable obligations for foundation models. This creates a competitive advantage for companies that meet EU standards early, as they will be prepared for similar frameworks elsewhere. Conversely, vendors who cannot meet the EU's documentation and testing requirements risk losing access to one of the world's largest markets. Long-Term Outlook Foundation models are likely to remain at the center of both innovation and regulatory scrutiny. As the AI Act moves toward full enforcement in 2026, the EU AI Office is expected to issue additional guidance refining the shared responsibility model and possibly expanding obligations for models with systemic impact. For identity verification, KYC, and financial services, the guidance means compliance work must start now, not in 2026. The ability to demonstrate early adoption of AI Act principles could serve as both a regulatory shield and a market differentiator. Amicus International Consulting advises all affected businesses to treat the AI Office's guidance as a baseline for global AI governance strategy. The most resilient organizations will integrate upstream and downstream compliance into a single operational framework, ensuring that no part of the AI lifecycle is left without oversight. Contact Information Phone: +1 (604) 200-5402 Email: info@ Website: TIME BUSINESS NEWS
New York Post
an hour ago
- New York Post
Swatch apologizes for ‘slanted eye' ad after online backlash in China
Swiss watchmaker Swatch issued an apology over the weekend and pulled ads that featured an Asian male model pulling the corners of his eyes in a 'slanted eye' pose. The images for the Swatch Essentials collection were widely condemned online in China, where many said they appeared to mimic racist taunts about Asian eyes. Shares in the company fell as much as 4% on Monday before paring losses to trade 3.1% lower. 3 The images for the Swatch Essentials collection were widely condemned online in China, where many said they appeared to mimic racist taunts about Asian eyes. Swatch 'It is very significant for a brand of that scale to misfire in this way,' said Mark Borkowski, who runs a public relations consultancy in London. 'This carelessness is really quite a fundamental mistake.' In an apology posted in both Chinese and English on its Weibo social media platform on Saturday, Swatch said it had 'taken note of the recent concerns' and removed all related materials worldwide. 'We sincerely apologize for any distress or misunderstanding this may have caused,' the statement said. It also posted the same apology on Instagram. Swatch declined to comment beyond its statement. The campaign resulted in a backlash on social media. 3 In an apology posted in both Chinese and English on its Weibo social media platform on Saturday, Swatch said it had 'taken note of the recent concerns' and removed all related materials worldwide. Swatch 'When I saw this news, I was quite shocked. Swatch has been in the Chinese market for many years, and I feel like most people are familiar with the brand,' said 23-year-old student Justin Zhao. 'I don't know why they did it. They were able to somehow release this after going through numerous approvals.' Borkowski said Swatch needed to investigate how the ad received the go-ahead from executives. The incident is the latest setback for a firm whose shares have fallen by more than half since early 2023 and which is facing a 39% tariff on its exports to the United States. Swatch, which also makes Omega, Longines and Tissot watches, relied on China, Hong Kong and Macau for around 27% of group sales last year. 3 Swatch, which also makes Omega, Longines and Tissot watches, relied on China, Hong Kong and Macau for around 27% of group sales last year. REUTERS Revenue for the watchmaker slumped 14.6% to 6.74 billion Swiss francs ($8.4 billion) in 2024, hit by a downturn in demand in China, where Swatch said it was seeing 'difficult market conditions and weak demand for consumer goods overall.' Peter Xu, a fashion influencer in China with over seven million Weibo followers, said he believed the controversy would impact Swatch's business in China, but given the speed of the apology, the fallout was likely to be short-lived. 'It was pretty stupid to release images like those ones,' he said. ($1 = 0.8065 Swiss francs)
Bloomberg
an hour ago
- Bloomberg
Neom Ski Resort Strains Saudi Prince's $1.5 Trillion Plan
Markets The Big Take Trojena is designated to host the 2029 Asian Winter Games. But set in a region with little snowfall, it's emerging as a great challenge to MBS's flagship project In 2022, Saudi Arabia announced one of its most ambitious endeavors to date: a sprawling ski resort in the heart of the dry Middle Eastern desert. It would feature ski slopes atop luxury hotel roofs, a lake hanging over a mountain cliff and a crystal skyscraper the size of the Eiffel Tower. The project — Trojena — is part of the planned megacity of Neom and designated to host the Asian Winter Games in 2029. But set in a region with little snowfall, it's becoming one of the most difficult tests yet of the kingdom's ability to pull off Crown Prince Mohammed bin Salman's grand ambitions and meet commitments for influential international events.
