AI Abuse Now a Crime in Italy: Deepfakes, Fraud, and Illegal AI Use Punishable by Up to Five Years in Prison

Italy Passes First Comprehensive AI Law In The EU With Tough Penalties And Sectoral Oversight

Italy has become the first European Union country to formally adopt a full legal framework regulating artificial intelligence, moving in step with the EU’s AI Act.

The Senate approved the law after a year of debate, with Prime Minister Giorgia Meloni’s government framing it as a decisive effort to guide the development and use of AI across the country.

Human-Centric Rules Extend Across Key Sectors

The legislation establishes human oversight, transparency, and safety as core principles, while also promoting innovation, cybersecurity, and economic growth.

It applies widely across healthcare, education, workplaces, the justice system, sport, and public administration.

AI use for children under 14 now requires parental consent.

Alessio Butti, undersecretary for digital transformation, said:

“This law brings innovation back within the perimeter of the public interest, steering AI toward growth, rights and full protection of citizens.”

Criminal Code Introduces AI-Specific Offences

Italy has strengthened its legal response to AI misuse.

A new offence targets the unlawful spread of AI-generated or manipulated content, including deepfakes, with prison terms ranging from one to five years if harm occurs.

Additionally, using AI to commit fraud, identity theft, market manipulation, or money laundering is now an aggravating circumstance, increasing potential sentences by a third.

Courts retain authority over rulings but can demand rapid removal of illegal content.

Government Agencies Lead Oversight, Critics Voice Concerns

Enforcement responsibility falls to the Agency for Digital Italy and the National Cybersecurity Agency.

Italy’s National Cybersecurity Agency

Meanwhile, financial and market regulators such as the Bank of Italy and Consob continue to oversee their respective domains.

Critics have questioned the choice of two government bodies rather than an independent regulator for overseeing such sensitive technology.

The law also addresses copyright cautiously, allowing AI-assisted works to gain protection if they stem from genuine intellectual effort.

Text and data mining is permitted only for non-copyrighted content or scientific research by accredited institutions.

Financial Support Aims To Boost Domestic Innovation

Up to €1 billion has been allocated from an existing state-backed venture capital fund to support equity investments in AI, cybersecurity, quantum technologies, and telecommunications.

While supporters argue this encourages domestic innovation, industry figures note the figure lags behind investments in the United States, China, and even other European nations such as France and Germany.

Sectoral Implementation Requires Transparency And Traceability

The law mandates professionals to disclose AI use in interactions with clients.

In healthcare, AI may assist in diagnosis and treatment, but final decisions rest with doctors, and patients must be informed.

Source: Freepik

Workplaces also require transparency, obliging employers to notify staff when AI tools are in operation.

A national AI observatory will monitor risks and benefits, ensuring alignment with sectoral rules.

Italy’s Ambitious AI Law Poses Questions For The Market And Innovation

Coinlive views this legislation as a double-edged move.

While Italy sets clear boundaries for AI, the relatively modest funding and complex regulatory oversight may challenge domestic projects’ ability to compete globally.

It raises the question of whether Italy’s AI sector can thrive under strict safeguards without larger-scale investment, or if smaller players might struggle to keep pace with international rivals.

This law invites scrutiny over whether regulatory ambition can harmonise with genuine market growth.