We Love AI

Close this search box.

Navigating the Legal Implications of Generative AI: A Preview of AI Regulations in Canada

Navigating the Legal Implications of Generative AI: A Preview of AI Regulations in Canada

Generative AI is transforming industries with its ability to create new content using algorithms such as machine learning and natural language processing. However, it also raises concerns about privacy, transparency, and accountability, which may need to be addressed through legislation.

Current State of Regulation

Currently, AI regulation in Canada is not fully established. Some laws address AI’s use in automated decision-making, but not AI as a whole. This creates a challenge for businesses looking to incorporate AI while safeguarding privacy.

For instance, the Act respecting the protection of personal information in the private sector in Quebec requires organizations that use exclusively automated processing to share the reasons and principal factors influencing a decision. Individuals also have the right to access and correct their personal information.

Proposed Regulations under the AIDA

The Digital Charter Implementation Act has been introduced, which if passed, would replace the Personal Information Protection and Electronic Documents Act with the Consumer Privacy Protection Act (CPPA) and the Artificial Intelligence and Data Act (AIDA).

The CPPA would define AI systems that aid in decision-making or replace human judgment as “automated decision systems.” This would require organizations to be transparent about the predictions, recommendations, or significant decisions made with an explanation.

The AIDA would regulate the high-impact AI systems used in international and interprovincial trade and commerce. Accountable parties would have to prevent physical or psychological harm, economic loss or damage to property, and biased output. Those in the AI supply chain would be held liable, including organizations that use generative AI apps.

Implications of the AIDA Regulations

Complied accountable parties’ obligations under the AIDA would include risk management, transparency, record-keeping, and notification. Accountable persons would have to establish protocols to identify, assess and mitigate risks of harm or biased output that could result from the use of AI and monitor compliance with such mitigation measures.

Accountable persons would also have to publish a plain-language description of the AI system and the types of content it generates. This includes the decisions, recommendations, or predictions made, and any other relevant information required by future regulation.

Similarly, accountable persons would have to keep records describing the measures established to identify, assess, and mitigate risks of harm or biased output, which may result from the use of the AI system. They would also have to notify the Ministry of Industry within a feasible time frame if high-impact systems result in, or are likely to result in, material harm.

Consequences of Non-Compliance

Failure to comply with governance and transparency requirements under AIDA could attract fines of up to the greater of CA$5 million and 2% for persons prosecuted summarily. For individuals, a fine at the court’s discretion, amounting to CA$50,000.

For offenses, persons can be liable for up to CA$25 million or 5% of global revenues, imprisonment, or a fine at the court’s discretion for individuals.

Preparing for the Regulations

It is important to keep in mind that AI regulation in Canada is still in its initial stages. Therefore, businesses should begin preparing for AI regulation by identifying all business processes that involve automated decision-making systems that impact individual legal rights or property, economic interests, or engage with human rights grounds.

Conducting assessments of any critical processes involving AI systems and identifying where such systems are used to make decisions based exclusively on automated decision-making would be crucial to ensure compliance with future regulations.

Contracts should also include provisions requiring vendors to describe how their AI system operates transparently in plain language. In doing so, businesses can satisfy the transparency requirements under future legislation and be confident that vendors can make corrections and protect personal information processed by their systems.


Generative AI provides substantial opportunities for businesses to innovate, streamline operations and create new products and services. But, it is also essential to evaluate the legal implications of its use. AIDA proposes comprehensive governance and transparency requirements for high-impact systems, reflecting the emergence of regulations in Canada.

Although AI regulation in Canada is still unfolding, businesses need to prepare and take proactive steps to identify their use of automated decision-making systems, assess AI processes, and establish strategies for managing and mitigating related risks. By preparing for future AI regulations, businesses can ensure compliance with any future regulations and avoid negative legal consequences.

Scroll to Top

Say Hello

Do you love AI? We’re looking for passionate individuals like you! Our community thrives on supporting and empowering each other. Let’s chat and see how we can collaborate and grow together!