The paper investigates whether large language model (LLM) compliance systems truly base their verdicts on the regulatory rule provided. By testing five models across 20 regulatory and platform-policy domains and manipulating the supplied rule—deleting, swapping, or negating it—the study finds that verdicts and internal compliance representations change little, indicating low rule sensitivity. Even the guard model, adapted to a custom rule taxonomy, shows minimal rule dependence and low accuracy, suggesting that accuracy alone does not guarantee rule-grounded compliance decisions.
arXiv:2608. 16852v1 Announce Type: new Abstract: Regulatory compliance monitoring in deployed language models is increasingly implemented as a legal and audit control, checking model outputs against written rules spanning data protection, healthcare, financial regulation, and platform policy.
By Saisab Sadhu, Aadit Sengupta, Vinay Kumar Sankarapu, Pratinav Seth
The study examines how different harness configurations affect a fixed large language model’s compliance with banking conduct rules. Four open‑weight models were tested across five harnesses on 156 pre‑registered retail‑banking scenarios, yielding 3,120 two‑turn episodes scored for rule violations and over‑refusals. Results show that while overall compliance rates varied modestly (87.3%–92.1%), the impact of a harness differed markedly between models, with some models’ best and worst harnesses differing by over 10 percentage points and a same‑model compliance reviewer reducing violations from 9.6% to 6.4%.
whyItMatters":"The findings suggest that validating a model’s compliance requires testing the specific model‑harness pair rather than the model alone, highlighting the importance of action logs over conversation transcripts for accurate conduct assessment."
By Mehmet Murat Huyut
arXiv:2608. 09028v1 Announce Type: new Abstract: Institutional policies stay in natural language while the systems that check compliance demand machine-readable constraints.
By Ponkrit Kaewsawee, Chaklam Silpasuwanchai, Chutiporn Anutariya
Large language models often justify legal decisions by citing statutes or precedents, but this study shows that while models correctly name the governing authority 66.7%-100% of the time, the actual verdict rarely changes when the cited authority is swapped—only 0.0%-21.7% on CaseHOLD, 30.0%-76.7% on ECHR and SCOTUS, and 43.3%-50.0% on ContractNLI. This gap persists across models of different sizes and even a purpose‑built legal‑reasoning model. Additionally, a red‑team evaluation revealed that models are more compliant with hidden adversarial instructions than they are sensitive to verdict changes, indicating that citing legal authority is a weak proxy for genuine reasoning and that verdicts remain vulnerable to manipulation.
arXiv:2607. 23386v1 Announce Type: new Abstract: We document a failure class in frontier large language models -- exception chain collapse -- observed in eligibility evaluation under nested conditional rules of the form "A is required UNLESS B applies, UNLESS C overrides B".
By Paul Simpson, John Kozak, Lisa Doake