SOUTH KOREA Trends and Developments Contributed by: Wooyoung Choi, Suhhee Han, Seonghwan Ju and Matt Younghoon Mok, Lee & Ko
(Article 7). The Minister of Science and ICT is required to formulate an AI master plan every three years (Arti - cle 6), and may designate an AI Policy Centre and operate an AI Safety Research Institute (Articles 11 and 12). The Act also provides a basis for government support for AI technology development, standardisa - tion, professional personnel, start-up promotion, and designation of AI cluster zones (Articles 13 to 26). Definition and classification The Act defines AI as “that which electronically imple - ments intellectual capabilities possessed by humans, such as learning, reasoning, perception, judgement and language understanding”, and classifies AI into high-impact AI and generative AI. High-impact AI refers to systems that may significantly affect human life, physical safety and fundamental rights, includ - ing those used in healthcare, biometric analysis for criminal investigation, decisions significantly affecting individuals’ rights and obligations, and public agency decision-making. Generative AI refers to systems that generate text, sound, images, video and other outputs by mimicking the structure and characteristics of input data. Transparency and safety obligations Where high-impact AI or generative AI is used, AI operators must provide users with prior notice. Failure to comply is subject to administrative fines of up to KRW30 million (approximately USD21,000). For gen - erative AI, outputs must be labelled as AI-generated through human-recognisable or machine-readable methods. For outputs comprising virtual sounds, images or videos difficult to distinguish from reality, operators must notify users in a clearly recognisable manner. For AI systems that (i) exceed prescribed cumulative computation amounts, (ii) use state-of-the-art AI tech - nology, and (iii) pose risks that may broadly and signif - icantly affect safety and fundamental rights, operators must take safety measures and submit results to the Minister of Science and ICT, including risk identifica - tion, assessment and mitigation throughout the AI life- cycle, and establishment of safety incident monitoring systems.
Additional requirements for high-impact AI AI operators must establish and operate risk manage - ment plans, explanation plans covering AI outputs and key criteria, user protection plans and human super - vision arrangements. Key details must be posted on websites, and records must be retained for five years. Operators must also endeavour to conduct prior assessments of impacts on fundamental rights. Overseas AI operators The Act applies to overseas conduct affecting the domestic market or domestic users. Overseas AI operators meeting prescribed thresholds for revenue or domestic users must designate a domestic repre - sentative. Failure to do so is subject to administrative fines of up to KRW30 million. Regulatory grace period and outlook The Ministry of Science and ICT has announced that regulations will be deferred for a minimum of one year. The Ministry released “AI Transparency Guidelines” on 22 January 2026 and has indicated it will supplement these during the grace period. As the Act’s content may be further specified by regulators, continued monitoring is advisable. Reforms to network separation requirements Overview Article 15 of the Electronic Financial Supervisory Regulations imposes network separation obligations on financial companies and electronic financial busi - ness operators, requiring separation between internal business systems and external networks such as the internet. While intended to prevent hacking and other electronic intrusions, these regulations had restricted use of generative AI and cloud-based software appli - cations (SaaS). In August 2024, the FSC and Financial Supervisory Service (FSS) announced the “Network Separation Improvement Roadmap”, permitting use of cloud- based generative AI and SaaS through designation as innovative financial services. On 19 January 2026, the FSC announced draft amendments to the Detailed Enforcement Rules that would allow SaaS use without innovative financial services review.
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