The European Union's proposed AI Act aims to regulate artificial intelligence by balancing innovation with safety, focusing on classifying AI systems based on their risk levels. It categorizes AI into unacceptable, high, and limited risk, imposing stringent compliance measures on high-risk systems to safeguard public safety and fundamental rights. Generative AI is not separately categorized but falls under existing categories with transparency obligations. Non-compliance with the Act could result in severe financial penalties, urging businesses to align with EU standards, necessitating a comprehensive review and enhancement of AI strategies and processes to ensure compliance. As the law is expected to be enforced within the next 12-24 months, companies are advised to prioritize transparency and prepare for the new regulatory landscape.