Hungary has taken a significant step in implementing the EU’s AI Act through Government Decree 1301/2024, which foresees the creation of a dedicated regulatory body under the Ministry of National Economy. This body will be responsible for overseeing both notifying and market surveillance duties as required by the AI Act, ensuring the possibility of 'one-stop-shop' administration for AI-related matters. It will also serve as the sole point of contact for fulfilling regulatory tasks related to the Act, simplifying procedures for AI developers and businesses.
In addition to these responsibilities, the future regulatory body will also be tasked with creating and operating a regulatory sandbox, a controlled environment that allows developers to test AI systems before market deployment. This sandbox will ensure that AI technologies can be developed and tested in compliance with safety, legal, and ethical standards, promoting both innovation and adherence to regulatory requirements.
A distinctive feature of Hungary’s approach is that, unlike in several other EU Member States, the responsibilities for AI regulation will not fall under the jurisdiction of the Data Protection Authority. Instead, the creation of a dedicated regulatory body emphasises the broader interdisciplinary nature of AI regulation, recognising that AI extends beyond data protection. This approach reflects a more comprehensive strategy for addressing the wider societal, economic, and technological impacts of AI but is at odds with the views expressed by the EDPB in its July 2024 Statement which recommended that Member States designate their Data Protection Authorities as their Market Surveillance Authorities under the AI Act.
The decree also envisions the establishment of the Hungarian Artificial Intelligence Council, a body comprising representatives from several key national institutions, including the National Media and Infocommunications Authority (NMHH), Hungarian National Bank (MNB), Hungarian Competition Authority (GVH), National Authority for Data Protection and Freedom of Information (NAIH), Supervisory Authority for Regulated Activities (SZTFH), and the Digital Hungary Agency. The Council will provide strategic guidance and official opinions on AI-related regulatory and policy matters. Its composition reflects the complexity of AI regulation, requiring insights from various sectors to address the multifaceted legal and compliance challenges AI presents. This wide-ranging representation highlights the fact that AI governance encompasses diverse legal fields, including data protection, financial regulation, competition law, cybersecurity, and telecommunications and media law.
The broad representation in the Council underscores the challenge that AI development and compliance present for companies. Businesses developing and deploying AI systems will need to navigate not only the specific requirements of the AI Act but also the intersecting regulations from various legal domains. The holistic, multidisciplinary approach is intended to ensure compliant and ethical AI operations. The increasing complexity of AI governance highlights the growing importance of responsible digital corporate governance in the ongoing digital transformation. Without such an approach, businesses will face increasing difficulty in ensuring AI systems are both compliant and aligned with the numerous regulatory requirements across sectors. This also means that non-compliance with AI regulations could result in multiple penalties under different laws, in addition to the AI Act's own substantial fines.
The decree sets a deadline of 30 November 2024 for the Minister of National Economy to prepare a proposal outlining the necessary legislation, related measures, and an assessment of the impact on the central budget. This proposal will detail the steps required to establish the regulatory body, the sandbox, and the council. More specific information about these developments will become available after this date.
