South Korea Enacts World’s First Comprehensive AI Law, Balancing Innovation and Safety

South Korea Takes Global Lead with AI Basic Act

South Korea has officially enacted what it claims to be the world’s first comprehensive set of laws governing artificial intelligence. The six-chapter, 43-article “AI Basic Act” became law on Thursday, establishing a regulatory framework that covers an unusually vast terrain of AI activity and players. The legislation aims to protect citizens while establishing what officials describe as a “foundation for trust” in an increasingly AI-driven society.

This landmark move positions South Korea ahead of other major economies in creating a unified approach to AI governance. While the European Union began implementing some AI-related regulations last year, the core bulk of its AI Act will begin a phased rollout in August. The United States still lacks a federal AI law, though the White House issued an executive order last month challenging “onerous” state laws deemed as stymieing AI innovation. China has taken a different approach, adding certain provisions for ethics or risk monitoring to its existing cybersecurity law.

South Korea’s AI Basic Act represents a significant step forward in the global effort to regulate artificial intelligence technologies. The law is designed to achieve two complementary goals: fostering the growth of South Korea’s AI industry while implementing necessary safeguards to protect citizens from potential risks associated with AI deployment.

We are approaching this from the most basic level of global consensus. The goal is not to stop AI development through regulation. It’s to ensure that people can use it with a sense of trust.

These comments from Kim Kyeong-man, deputy minister of the office of AI policy at the ICT ministry, highlight South Korea’s intention to create a balanced framework that doesn’t hinder technological advancement while addressing public concerns about safety and reliability.

Defining High-Impact AI Systems

A central feature of South Korea’s new law is its focus on “high-impact AI”—systems that have the potential to significantly affect human life, safety, or fundamental rights. The legislation specifically identifies 11 critical areas where AI systems require enhanced oversight and transparency measures:

• Energy supply systems
• Production processes for drinking water
• Healthcare service systems
• Medical device development and use
• Nuclear materials and facilities management
• Biometric information analysis for criminal investigations
• Employment and loan assessments
• Transportation systems and management
• Government decision-making affecting public services
• Student assessment in education
• Other areas significantly impacting human life, safety, and rights

For these high-impact applications, companies must implement several key safeguards. They must be able to explain their AI system’s decision-making logic if asked, ensure humans can intervene when necessary, and provide clear notice to users that they are interacting with AI-powered services. This applies to situations like systems used to screen applicants for loans or employment opportunities.

The law introduces an important distinction between “high-impact AI” and what South Korea terms “high-performance AI.” While the European Union focuses primarily on application-specific risk in its regulations, South Korea has taken a different approach by applying technical thresholds to determine which systems require regulation. These thresholds include indicators such as cumulative training computation, meaning only a very limited set of advanced models would be subject to the most stringent safety requirements.

Currently, the South Korean government indicates that no existing AI models, either domestically or internationally, meet the criteria for regulation under this high-performance clause. Similarly, officials state that no domestic services currently fall into the “high-impact” category, though fully autonomous vehicles at Level 4 or higher could potentially meet this criteria in the future.

Transparency Requirements and AI Labeling

One of the most visible aspects of South Korea’s AI regulation involves requirements for transparency in AI-generated content. Under the new law, companies must provide clear or audible labels—such as watermarks—for AI-generated content that could be mistaken for real life. This requirement specifically targets deepfake content and other AI outputs that pose risks of misinformation or deception.

The approach to labeling varies based on the type of content. For outputs where distinguishing between real and AI-generated is crucial for safety or authenticity, visible labeling is mandatory. However, for creative content made using AI, such as games, animations, or webtoons, the law allows for less intrusive disclosure methods, including placing labels in metadata that may not be immediately visible to end users.

This nuanced approach has raised questions in industries like webtoon creation, where platforms and creators are uncertain about how broadly “AI-generated” content is defined. Concerns persist over whether partial AI use—such as background generation, coloring, or editing—could trigger disclosure obligations. The law does not regulate individual users who simply employ AI tools, but it does apply to platforms and companies that offer AI-powered creation tools or distribute AI-generated works.

Applying watermarks to AI-generated content is the minimum safeguard to prevent side effects from the abuse of AI technology, such as deepfake content.

This statement from a ministry official underscores the government’s emphasis on labeling as a fundamental protection measure against AI misuse. The transparency requirements extend beyond content labeling to include mandatory disclosures when users interact with AI-powered services. Companies must notify users in advance when providing products or services that utilize high-impact or generative AI, typically through mechanisms like pop-up alerts or prominent notices.

Governance Structure and Industry Support

The AI Basic Act establishes a comprehensive governance structure for AI policy in South Korea. The Ministry of Science and ICT serves as the primary authority responsible for AI policy implementation, while the National AI Committee operates under the president to deliberate and decide on broader AI policy directions. The legislation also creates an AI Policy Center and an AI Safety Institute to support policy implementation and address safety concerns.

Beyond regulatory measures, the law includes numerous provisions designed to support AI development and growth in South Korea. These promotional measures include support for AI research and development, standardization of AI technology, development of AI learning data, and initiatives to help companies adopt and utilize AI technologies. Special attention is given to supporting small and medium-sized enterprises, startups, and talent development in the AI field.

The law also provides the legal foundation for establishing a “Basic Plan for AI,” which will serve as a policy roadmap for developing AI technology in South Korea. This comprehensive approach recognizes that successful AI regulation requires not just restrictions but also active support for innovation and competitiveness in the global AI landscape.

To reduce the initial burden on businesses, the South Korean government has implemented a grace period of at least one year. During this time, authorities will not conduct fact-finding investigations or impose administrative sanctions, focusing instead on consultations and education. A dedicated AI Act support desk has been established to help companies determine whether their systems fall within the law’s scope and how to respond appropriately.

The Framework Act on AI Help Desk, staffed with experts from organizations including the AI Safety Institute and the National Information Society Agency, provides confidential consultations and guidance to those developing, doing business with, or using artificial intelligence tools while complying with the new regulations.

Compliance Requirements and Penalties

Companies operating in South Korea or offering services to Korean users face specific compliance obligations under the new law. Foreign AI companies meeting certain criteria—such as having global annual revenue of 1 trillion won ($681 million) or more, domestic sales of 10 billion won or higher, or at least 1 million daily users in the country—must designate a local representative to liaise with authorities. Currently, major companies like OpenAI and Google fall under these requirements.

AI operators are divided into two categories: AI development operators who develop and provide AI, and AI utilization operators who provide AI products or services using AI provided by developers. Both categories face transparency obligations, but the regulatory focus remains primarily on high-impact AI and generative AI systems.

The enforcement approach under South Korea’s law is intentionally light compared to other jurisdictions. It does not impose criminal penalties. Instead, it prioritizes corrective orders for non-compliance, with fines—capped at 30 million won ($26,200)—issued only if those orders are ignored. This reflects a compliance-oriented approach rather than a punitive one, as government officials have emphasized.

For comparison, the EU’s regulatory framework establishes much stronger sanctions with various levels of penalties depending on the type of violation, including administrative fines of up to 7% of global annual turnover. This significant difference in penalty severity reflects South Korea’s stated intention to maintain minimum regulations while still establishing a basic safety framework.

The three specific violations subject to fines under South Korea’s law are: failure to notify authorities about AI-based operations when providing products or services using high-impact AI or generative AI, failure to designate a domestic representative when required, and failure to comply with suspension or corrective orders issued by the Minister of Science and ICT.

Industry Response and Startup Concerns

While the government positions the AI Basic Act as a balanced approach that supports innovation while ensuring safety, not everyone in the tech industry shares this perspective. South Korean startups have expressed concerns about the potential compliance burdens imposed by the new regulations, particularly given that they take effect sooner than similar frameworks in other countries.

According to a survey by the Startup Alliance, only 2% of AI-focused startups feel they have a formal compliance plan in place, while approximately half admit they do not fully understand the new law’s requirements. This lack of clarity has created anxiety among founders who worry that vague language in the legislation might force them to adopt overly cautious development strategies to avoid regulatory risk.

There’s a bit of resentment — why do we have to be the first to do this?

This comment from Lim Jung-wook, co-head of South Korea’s Startup Alliance, captures the frustration some entrepreneurs feel about being subject to comprehensive AI regulations before their global competitors. Many founders question whether being first to regulate AI will give South Korea an advantage or put its domestic companies at a disadvantage internationally.

President Lee Jae Myung has acknowledged these concerns, urging policymakers to listen to industry feedback and ensure that venture companies and startups receive adequate support. During a recent meeting with aides, Lee emphasized the importance of maximizing the industry’s potential through institutional support while preemptively managing anticipated side effects.

The Ministry of Science and ICT has responded to these concerns by planning a guidance platform and dedicated support center for companies during the grace period. A spokesperson noted that the government continues to review measures to minimize the burden on industry and is considering extending the grace period if domestic and overseas industry conditions warrant such action.

Comparison with International Approaches

South Korea’s AI Basic Act represents a distinct regulatory philosophy that differs from approaches taken in other major economies. The legislation references both the U.S. model, which focuses on private sector autonomy, and the EU regulatory model, which emphasizes safety and reliability. Ultimately, South Korea has chosen a unique path that attempts to harmonize minimal regulation with AI promotion to achieve the goal of becoming a leading country in global AI competitiveness.

Like the EU AI Act, South Korea’s framework defines AI systems and establishes various obligations related to high-impact AI, including Fundamental Rights Impact Assessments (FRIAs). However, the specific level of regulation may change according to future subordinate legislation, which is expected to be released in the first half of 2025.

A significant difference between the South Korean and EU approaches lies in how obligations are structured. The EU AI Act stipulates differentiated obligations based on the types of participants in the AI value chain, whereas South Korea’s AI Framework Act comprehensively defines obligations without distinguishing between different types of participants. This simpler approach may reduce complexity but could also create challenges in applying appropriate oversight across the diverse AI ecosystem.

South Korea’s approach to defining high-impact AI also differs from the EU’s methodology. While the EU focuses on application-specific risk—targeting AI used in areas like healthcare, recruitment, and law enforcement—South Korea applies technical thresholds to determine which systems require regulation. These include indicators such as cumulative training computation, resulting in a potentially much smaller set of regulated systems under current technological capabilities.

The difference in regulatory philosophy is also evident in the penalties imposed for violations. The EU has established strong sanctions with fines of up to 7% of global annual turnover, while South Korea’s framework imposes administrative fines of only up to 30 million won (approximately $26,200). This dramatic difference reflects South Korea’s emphasis on compliance and correction rather than punishment.

Global Implications and Future Outlook

South Korea’s enactment of comprehensive AI legislation carries significant implications for the global AI landscape. As the second country after the European Union to adopt a comprehensive AI regulatory framework, South Korea has provided a new legislative example that other nations may consider when developing their own approaches to AI governance.

The law’s passage despite political turmoil involving President Yoon Suk Yeol’s declaration of martial law and subsequent impeachment demonstrates the cross-party consensus on the importance of AI regulation. The act passed the National Assembly’s plenary session on December 26, 2024, with overwhelming bipartisan support, highlighting the broad political agreement on addressing AI challenges.

Looking ahead, South Korean officials have acknowledged that the current legislation represents a starting point rather than a finished product. The detailed implementation of many provisions will depend on subordinate legislation and sector-specific guidelines that will be finalized during the one-year preparation period before the law takes full effect in January 2026.

The coordinating function of the National AI Committee will become crucial as South Korea works to harmonize the expertise of relevant ministries considering the characteristics of different regulatory targets or sectors. As AI technology spreads across all fields—from personal information and copyright to healthcare and defense—effective governance will require careful coordination between various government agencies.

As global norms and governance discussions on AI intensify, the need for international interoperability and cooperation in regulations to ensure AI trustworthiness has grown even greater. South Korea’s approach may influence these international discussions, particularly regarding how to balance innovation with safety concerns in AI governance.

The Bottom Line

• South Korea has enacted the world’s first comprehensive AI law, the AI Basic Act, covering development, deployment, and usage of artificial intelligence.
• The law defines “high-impact AI” in 11 critical sectors including healthcare, finance, transportation, and government services, requiring enhanced oversight and human intervention capabilities.
• AI-generated content must be labeled, with visible watermarks for content that could be mistaken for reality and less intrusive labeling for creative works like webtoons and animations.
• Foreign AI companies meeting revenue or user thresholds must designate a local representative in South Korea.
• Penalties for non-compliance are capped at 30 million won ($26,200), significantly lower than EU fines that can reach 7% of global annual turnover.
• The law includes a one-year grace period focused on guidance rather than punishment, with a dedicated help desk for companies seeking compliance assistance.
• Startups have expressed concerns about compliance burdens and vague language in the legislation, with only 2% reporting they have formal compliance plans in place.
• The law aims to position South Korea as a top three global AI powerhouse while establishing a foundation of trust for AI technology.
• South Korea’s approach differs from the EU by focusing on technical thresholds rather than application-specific risks for regulating advanced AI systems.
• Full implementation will begin in January 2026, following a one-year preparation period for subordinate legislation and detailed guidelines.