Sovereign Compliance: Engineering for EU AI Act & SOC2 Article 50

The EU AI Act represents the most comprehensive AI regulation to date. Article 50, in particular, imposes transparency and human oversight requirements that most AI systems cannot satisfy with existing architectures. This paper documents how to translate legal requirements into deterministic guardrails. The compliance challenge: regulations are written in natural language, but enforcement requires machine-checkable properties. Our approach: a formal specification layer that maps regulatory text to executable predicates, then validates AI system behavior against those predicates. For Article 50, the key requirements are: (1) disclosure of AI interaction, (2) meaningful human oversight, and (3) logging of decisions. We implement these through: mandatory watermarking with cryptographic verification, human-in-the-loop escalation triggers, and append-only audit logs with Merkle tree proofs. The engineering insight: compliance cannot be an afterthought. It must be architected into the system from the foundation—hence 'sovereign' compliance, where the safety layer owns the compliance contract and the AI system is a tenant.