However what I don't understand is why that even mattered.
Were the students just learning the questions and answers by heart to regurgitate them on the final exam? If they had any understanding at all they should have caught on, but even if they didn't they would simply demonstrate their lack of understanding, it is not dishonest.
Or did they get to fill in the answers unsupervised somewhere? Because if they were left unsupervised with access the web then this is likely just the tip of the iceberg, they could more easily cheat by discussing the questions with each other.
Edit: Reading more carefully it was a take-home exam apparently, which seems to have consisted of multiple-choice questions that are largely the same each year. I can vaguely see how looking up old exams would invalidate it as a test, but if your test is invalidated by normal exam preparation is it the exam's fault or the student's?