The two other institutions I taught at used to have very strict policies about it and then at some point they became laxer in a similar way. It used to be a no warnings policy, and then became more wishy washy.
I always assumed it was to be more realistic, in that many students were being granted exceptions of sorts. There also can be a lot of grey area with cheating. Overall my impression was that some lawyers recommended the change to avoid liability. But I really don't know.