South Korea's AI Law: Balancing Growth, Trust

South Korea officially began enforcing its Artificial Intelligence (AI) Basic Act on January 22, 2026, establishing a comprehensive regulatory framework for AI across both public and private sectors. This landmark legislation aims to foster industry growth while ensuring safety, transparency, and public trust in AI technologies, according to the Ministry of Science and ICT.

The new law positions South Korea as a global leader in AI governance, being the second country after the European Union to adopt such a comprehensive framework. However, unlike the EU's phased implementation, South Korea's act became fully operational almost immediately, as reported by Global News.

Key provisions mandate human oversight for "high-impact" AI systems and require clear labeling for AI-generated content, particularly deepfakes, to prevent misinformation. The Ministry of Science and ICT stated that these measures are designed to build a foundation of safety and trust for AI innovation.

Despite the government's intentions, local startups have voiced concerns regarding the new regulations. Many fear that compliance burdens and potentially vague standards could stifle innovation and create operational challenges, according to a report by The Times of India.

President Lee Jae Myung acknowledged these industry concerns, emphasizing the need for ongoing dialogue between policymakers and business leaders. To ease the transition, the government has implemented a grace period of at least one year, focusing on guidance and education rather than immediate penalties.

During this grace period, the Ministry of Science and ICT will not conduct fact-finding investigations or impose administrative sanctions, as noted by Global News. This approach aims to help companies adapt to the new requirements and clarify the law's scope.

The AI Basic Act consolidates 19 separate regulatory proposals, unifying South Korea's national AI framework. This legislative effort reflects the nation's ambition to become a top three global AI powerhouse, according to Reuters.

• Background Context and Legislative Journey: South Korea's AI Basic Act, officially known as the Act on the Development of Artificial Intelligence and Establishment of Trust, was passed by the National Assembly on December 26, 2024, after more than four years of discussion. It was then signed into law on January 21, 2025, and took full effect on January 22, 2026. This makes South Korea one of the first nations globally to implement a comprehensive AI regulatory framework.

• Aims and Objectives: The primary purpose of the AI Basic Act is to balance the rapid advancement of AI technologies with the protection of human rights and dignity, as stated by securiti.ai. The Ministry of Science and ICT (MSIT) aims to strengthen national competitiveness in AI, foster public trust, and ensure the safe and transparent use of AI systems. The law also seeks to enhance the quality of life through responsible AI development.

• Key Regulatory Pillars: The legislation establishes legal grounds for a national AI control tower and an AI Safety Institute to oversee safety and trust-related assessments. It mandates transparency and safety responsibilities for businesses deploying "high-impact" AI systems, which include applications in critical sectors like healthcare, energy, and finance, requiring human oversight. Additionally, generative AI content must be clearly labeled or watermarked.

• Distinction from EU AI Act: While both the EU and South Korea have comprehensive AI regulations, South Korea's approach differs in its definition of "high-performance AI." Global News reported that the EU focuses on application-specific risks, whereas South Korea applies technical thresholds, such as cumulative training computation, meaning only a very limited set of advanced models would be subject to the strictest safety requirements. The South Korean law also became fully operational much faster than the EU's phased rollout.

• Startup Concerns and Government Response: South Korean startups have expressed significant apprehension, citing potential compliance burdens and vague language that could hinder innovation. A survey by the Startup Alliance revealed that only 2% of AI startups had a formal compliance plan, and nearly half did not fully understand the new law. In response, the government, through the MSIT, has promised a one-year grace period and established an AI Act support desk to provide guidance and education.

• Enforcement and Penalties: The enforcement mechanism of the AI Basic Act is described as "intentionally light" compared to the EU's stringent penalties. Non-compliance will primarily result in corrective orders, with fines capped at 30 million won (approximately $21,000 to $26,210) only if these orders are ignored. This reflects a compliance-oriented rather than punitive approach, as stated by Global News.

• Future Outlook and International Implications: The AI Basic Act is seen as a strategic move to solidify South Korea's position in the global tech arena. The Ministry of Science and ICT is currently drafting subordinate regulations, expected in the first half of 2025, to clarify implementation details. This proactive regulatory stance could influence international standards and foster partnerships, particularly with regions like Europe and Japan, where regulatory convergence is emerging.