diff --git a/src/components/application_manager/src/policies/policy_handler.cc b/src/components/application_manager/src/policies/policy_handler.cc
index cb9b7df3e1b..890dd5b57a8 100644
--- a/src/components/application_manager/src/policies/policy_handler.cc
+++ b/src/components/application_manager/src/policies/policy_handler.cc
@@ -1380,7 +1380,6 @@ void PolicyHandler::OnAllowSDLFunctionalityNotification(
       }
 
 #ifdef EXTERNAL_PROPRIETARY_MODE
-
       ApplicationSet applications;
       {
         DataAccessor<ApplicationSet> accessor =
@@ -1426,7 +1425,6 @@ void PolicyHandler::OnAllowSDLFunctionalityNotification(
   }
 
 #ifdef EXTERNAL_PROPRIETARY_MODE
-
   if (last_activated_app_id_) {
     ApplicationSharedPtr app =
         application_manager_.application(last_activated_app_id_);
@@ -1437,7 +1435,14 @@ void PolicyHandler::OnAllowSDLFunctionalityNotification(
                    << "' not found among registered applications.");
       return;
     }
-    if (is_allowed) {
+
+    bool is_allowed_by_policies = true;
+    if (PolicyEnabled()) {
+      is_allowed_by_policies =
+          !policy_manager->IsApplicationRevoked(app->policy_app_id());
+    }
+
+    if (is_allowed && is_allowed_by_policies) {
       // Send HMI status notification to mobile
       // Put application in full
       AudioStreamingState::eType audio_state =
@@ -1510,7 +1515,9 @@ void PolicyHandler::OnActivateApp(uint32_t connection_key,
     // is not allowed.
     if (!permissions.isSDLAllowed) {
       permissions.priority.clear();
-      last_activated_app_id_ = connection_key;
+      if (!permissions.appRevoked) {
+        last_activated_app_id_ = connection_key;
+      }
     }
 
     if (permissions.appRevoked) {
diff --git a/src/components/application_manager/test/policy_handler_test.cc b/src/components/application_manager/test/policy_handler_test.cc
index a66cff17270..f566bed9340 100644
--- a/src/components/application_manager/test/policy_handler_test.cc
+++ b/src/components/application_manager/test/policy_handler_test.cc
@@ -926,8 +926,8 @@ void PolicyHandlerTest::TestActivateApp(const uint32_t connection_key,
           _,
           _));
 #endif  // EXTERNAL_PROPRIETARY_MODE
-
-  EXPECT_CALL(*application1, policy_app_id()).WillOnce(Return(kPolicyAppId_));
+  EXPECT_CALL(*application1, policy_app_id())
+      .WillRepeatedly(Return(kPolicyAppId_));
   EXPECT_CALL(*mock_policy_manager_,
               GetAppPermissionsChanges(kMacAddr_, kPolicyAppId_))
       .WillOnce(Return(permissions));
diff --git a/src/components/policy/policy_external/test/policy_manager_impl_test.cc b/src/components/policy/policy_external/test/policy_manager_impl_test.cc
index 4d39e699b52..95fc783b2d4 100644
--- a/src/components/policy/policy_external/test/policy_manager_impl_test.cc
+++ b/src/components/policy/policy_external/test/policy_manager_impl_test.cc
@@ -66,6 +66,7 @@ const int kServiceTypeInt = 0;
 const std::string kDeviceNumber = "XXX123456789ZZZ";
 const std::string kAppStorageFolder = "app_storage_folder";
 const std::string kValidAppId = "1234";
+const std::vector<std::string> kDevices{kDeviceNumber};
 }  // namespace
 
 class PolicyManagerImplTest : public ::testing::Test {
@@ -88,6 +89,7 @@ class PolicyManagerImplTest : public ::testing::Test {
 
     ON_CALL(policy_settings_, app_storage_folder())
         .WillByDefault(ReturnRef(kAppStorageFolder));
+    ON_CALL(listener_, GetDevicesIds(_)).WillByDefault(Return(kDevices));
   }
 
   ::testing::AssertionResult IsValid(const policy_table::Table& table) {