Signal Digital omnibus on AI: EU delays high-risk AI Act deadlines, adds deepfake/CSAM ban

Summary

The EU's Digital Omnibus on AI, endorsed by the European Parliament on June 16, 2026 by a 423-57 vote (174 abstentions), entered into full legal force as Regulation (EU) 2026/1744 on July 27, 2026. High-risk AI obligations for stand-alone Annex III systems are deferred from August 2, 2026 to December 2, 2027, and for AI embedded in regulated products under Annex I to August 2, 2028. Article 50 transparency obligations — requiring disclosure that users are interacting with AI and labeling of AI-generated audio, image, video or text — are not delayed and still apply from August 2, 2026, though watermarking requirements for systems already on the market are pushed to December 2, 2026, a shorter extension than originally proposed. A new prohibited practice targeting AI systems used to create non-consensual sexual/intimate imagery and child sexual abuse material takes effect December 2, 2026, closing a loophole by applying whenever such content is a "reasonably foreseeable and reproducible" outcome of a system, without requiring proof of intentional modification. Small mid-cap companies (up to 500 employees) also gained expanded exemptions, while the postponement leaves banned-practice prohibitions, AI literacy rules and general-purpose AI model obligations on their original timeline.