# A Framework for Compliance with Regulation (EU) 2024/1689 for Small and Medium-Sized Enterprises
## 1 Introduction  
On April 2018, the European Commission started the process for the European strategy on artificial intelligence (AI) in its initial communication titled \"Artificial Intelligence for Europe\" [1]. Its aim, as described in the document, was to make the European Union (EU) the global leader in trustworthy AI. In December 2018, this communication was followed by the \"Coordinated Plan on Artificial Intelligence\" [2], updated in 2021, providing a more detailed strategy. After a long period of negotiations between the EU institutions and other interested parties, the initial proposal of the Artificial Intelligence Act (EU AI Act or Act) came into its final draft [3] in May 2024. On 13 June 2024, the Act was signed, and on 12 July 2024 it was published in the European Union's Official Journal (Regulation (EU) 2024/1689) and it entered into force and application 20 days later, on 1 August 2024. Its purpose, as stated in Article 1 [4], is to ensure, among other things, that AI is safe for the public and respects fundamental rights and values, supporting simultaneously the proper functioning and the promotion of innovation in the Single Market. It is the European reaction to global concerns raised regarding AI and its responsible development and use, setting at the same time common rules in the EU area for companies. As expected, the EU AI Act incorporates articles that refer to potential fines and others that impose specific requirements for the final product according to its risk level and for the whole supply chain. These can be challengingfor companies to comply with, especially for small and medium-sized enterprises (SMEs), due to their limited resources and expertise. Based on the definition in the EU recommendation of 2003 [5], SMEs are companies that count less than 250 staff and have a turnover of equal or less than EUR 50 million. Our focus is on SMEs, as they represent the majority of active companies worldwide and 99% of the companies in the EU market, according to Eurostat [6], based on 2020 data. These companies are challenged more when the EU demands some sort of compliance within a certain regulatory framework. Compliance is a key notion when introducing a new regulation, such as the EU AI Act, which affects the development process of new AI systems, as well as its deployment and distribution, imposing limitations and specifications. The results of compliance are twofold: additional supply-chain costs and possible fines for active or potentially active companies, and conformity of the product with certain safety standards for society. In the case of the EU AI Act, lack of compliance may lead to fines up to EUR 35 million or 7% of the previous year's worldwide turnover, whichever is higher. According to the EU AI Watch Index of 2021 [7], the largest number of AI firms are US-based, followed by China, then the EU and the UK. Apart from China, in all other countries, most companies that are AI or AI-related are focused on selling goods and services rather than filing patent applications. Thus, they are not actively involved in the actual development cycle of AI or AI-related technology. The report observes that the largest firms in the field are established in the US (233 companies) and in China (226 companies), while the EU (43 companies) lags behind them. One possible interpretation of this observation is that it is more challenging for several reasons for SMEs in the EU Single Market to innovate in the AI industry. The AI Act issues new obligations that could either discourage them or make it more difficult for them to engage in the development of AI systems and compete with companies around the globe. This paper seeks to answer the following research question: How can SMEs that develop or plan to develop AI systems more effectively comply with the EU AI Act throughout the lifecycle of their products? By \"more effectively,\" we refer to minimizing the expenditure of time and resources--often limited for SMEs--during the compliance process.