diff --git a/litellm/proxy/policy_engine/policy_matcher.py b/litellm/proxy/policy_engine/policy_matcher.py
index ab73970bfab..888981f85f5 100644
--- a/litellm/proxy/policy_engine/policy_matcher.py
+++ b/litellm/proxy/policy_engine/policy_matcher.py
@@ -81,6 +81,19 @@ class PolicyMatcher:
         if not PolicyMatcher.matches_pattern(context.model, scope.get_models()):
             return False
 
+        # Check tags (only if scope specifies tags)
+        # Unlike teams/keys/models, empty tags means "do not check" rather than "match all"
+        scope_tags = scope.get_tags()
+        if scope_tags:
+            if not context.tags:
+                return False
+            # Match if ANY context tag matches ANY scope tag pattern
+            if not any(
+                PolicyMatcher.matches_pattern(tag, scope_tags)
+                for tag in context.tags
+            ):
+                return False
+
         return True
 
     @staticmethod
diff --git a/litellm/proxy/policy_engine/policy_registry.py b/litellm/proxy/policy_engine/policy_registry.py
index 5fb5084f648..a2431977b24 100644
--- a/litellm/proxy/policy_engine/policy_registry.py
+++ b/litellm/proxy/policy_engine/policy_registry.py
@@ -484,6 +484,7 @@ class PolicyRegistry:
                 )
                 self.add_policy(policy_response.policy_name, policy)
 
+            self._initialized = True
             verbose_proxy_logger.info(
                 f"Synced {len(policies)} policies from DB to in-memory registry"
             )