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The Signicat Blog

AI Act: What You Need to Know

AI is becoming a central tool for companies, from simplifying processes to improving the way they connect with customers. But alongside its benefits come critical questions about safety, fairness, and accountability. That’s where the EU AI Act steps in.

This new regulation sets clear rules on how AI should be used. For businesses, it goes beyond compliance. It’s about building trust in a world where security and transparency matter more than ever.

What is the AI Act? 

The AI Act is the EU’s first legal framework that focuses on regulating AI. Its goal is simple: to make sure AI is used safely, ethically, and without causing harm. 
 
To achieve this, it categorises AI systems into different levels of risk: 

  • Minimal risk: Systems like spam filters or AI-powered chatbots face little to no regulation. 
  • Limited risk: Tools that generate AI-driven content require some transparency to ensure users know they are interacting with AI. 
  • High risk: AI used in critical areas—such as healthcare, finance or identity verification—must meet strict security and compliance standards. 
  • Unacceptable risk: AI that threatens fundamental rights, such as social scoring systems, is banned entirely. 

The AI Act and High-Risk AI Systems 
 
One of the key focuses of the AI Act is high-risk AI systems. These are the technologies that have a significant impact on people’s lives and therefore face much stricter rules. For example, biometric verification—including facial recognition and fingerprint scanning—falls into the high-risk category. 
 
So, what does this mean for businesses using these technologies? Here’s what’s required: 

  • Be transparent – AI decision-making can’t be a black box. Companies must explain how their systems work and ensure they aren’t biased. 
     
  • Strengthen security – AI systems should be protected against hacking and fraud. Businesses must implement strong security to protect both the systems and the sensitive data they use. 
     
  • Manage risks – Businesses must continuously assess and mitigate potential risks, ensuring their AI systems aren’t vulnerable to misuse or fraud. 

These rules aren’t only about compliance.— they are essential for protecting both your company and your customers.  
 
By August 2026, all high-risk AI systems must meet the AI Act’s rules on transparency, security, and risk management.  

Why Does the AI Act Matter for Identity Verification? 
 
As AI evolves, so does the sophistication of identity fraud. The numbers tell a worrying story. According to Signicat’s recent report, AI-driven identity fraud has surged by 80% in the past three years. Deepfake attacks alone have jumped by 2,000%, now making up 6.5% of all fraud attempts. Meanwhile, AI-generated phishing scams have increased by 1,200% since 2022. And the rise of voice cloning scams is equally troubling—according to a study conducted by Starling Bank, 28% of people have already fallen victim, yet nearly half don’t even realise the threat. 
 
AI-driven fraud now causes 38% of all fraud-related revenue losses. As fraud gets more sophisticated, following the AI Act helps strengthen your defences against these harder-to-detect threats.

Source: Battle Against AI-Driven Identity Fraud research, 2024. 

Fighting AI-Driven Identity Fraud 

While many businesses know the risks, only few are fully prepared to fight back. 75% of companies see the need for stronger fraud prevention but only 22% have taken real action. This gap leaves businesses open to costly attacks. 

The challenge is clear: fraudsters are always evolving, using new AI tools to carry out their attacks. But businesses can fight back. With the right strategies in place, it’s possible to stay ahead of these fast-moving threats. 

So, what can businesses do to close the gap and protect themselves from AI-driven fraud? 

  • Multi-layered security – Combining biometrics, behavioural analysis, and data verification makes it much harder for fraudsters to succeed. 
     
  • AI vs AI – Fraudsters use AI to attack. So, businesses need AI to defend. Smart fraud detection tools can spot deepfakes and anomalies in real time and help your business stay one step ahead. 
     
  • Continuous monitoring – AI systems must be regularly tested for vulnerabilities. Risk management isn’t a one-time task; it’s an ongoing process that should be integrated into your company’s operations. 
     
  • Work with experts – Partnering with trusted providers helps set up reliable fraud detection systems and security measures. 
     
  • Compliance-first mindset – Following the AI Act is not only about avoiding penalties—it is about protecting your customers and your reputation. 

The AI Act does more than introduce regulations. It’s a wake-up call for businesses to adopt responsible, transparent AI practices. When it comes to identity verification and fraud prevention, meeting these standards is crucial—and it can’t wait. AI fraud is already a reality, and the longer businesses delay, the more vulnerable they become.