Right Frame, Wrong Rule: Cultural Cues Expose the Financial Knowledge Gap They Were Meant to Close

English financial NLP has advanced rapidly through benchmarks targeting earnings analysis, market sentiment, tabular reasoning, and financial question answering, yet Arabic financial NLP remains virtually nonexistent, despite 422 million speakers, $4.9 trillion in Gulf sovereign wealth, and a$4-5 trillion Islamic finance industry requiring specialized Shari'ah compliance over instruments like sukuk, murabaha, and takaful. We introduce Sahm, the first Arabic financial benchmark spanning seven tasks: AAOIFI standards QA, fatwa-based QA/MCQ, accounting and business exams, financial sentiment analysis, extractive summarization, and event-cause reasoning, comprising 14,380 expert-verified instances from authentic regulatory, juristic, and corporate sources. Evaluating 20 LLMs, we find Arabic fluency does not imply financial reasoning: models achieving 91% on recognition tasks drop sharply on generation, and event-cause reasoning exposes the widest performance gap (1.89-9.84/10). We release the benchmark and dataset to support trustworthy Arabic financial assistants.

Existing research largely reduces cultural intelligence in LLMs to a knowledge-level problem, overlooking whether models can effectively utilize their acquired knowledge in realistic scenarios. To bridge this gap, we introduce CultureForest, a benchmark for \textit{Cultural Norm Grounded Reasoning}. Each question is grounded in a small set of atomic norms, enabling verifiable and attributable evaluation. CultureForest comprises 5,378 examples across 8 domains and 53 countries/regions, and supports a progressive evaluation from multiple-choice to open-ended generation. Extensive experiments reveal that even top-tier models degrade substantially in open-ended settings, accompanied by pronounced cross-region disparities. Through targeted analysis, we uncover several consistent patterns: (1) test-time reasoning yields limited gains and may exacerbate inequity; (2) models exhibit highly shared regional preference structures; (3) model responses are markedly conservative, especially under stricter cultural constraints; and (4) by disentangling cultural knowledge acquisition from cultural reasoning, we show that while LLMs possess substantial cultural knowledge, their performance is further bottlenecked by its effective use. These findings point to a necessary shift from knowledge-centric evaluation toward measuring knowledge-grounded reasoning.

Multilingual fluency often invites a stronger assumption: a model that can speak a user's language must also understand the culture encoded by that language. We call this the Illusion of Cultural Alignment. To test this assumption directly, we introduce MSQA, a benchmark of 1,064 natively sourced questions across 11 language groups, five cultural dimensions, and three difficulty tiers. Unlike translated benchmarks, MSQA targets locally grounded knowledge and reduces shortcuts from English-centric cross-lingual transfer. Evaluating 18 LLMs, we find substantial cultural degradation and a pronounced Locality Effect: cultural competence tracks pre-training exposure more closely than general reasoning ability. We further show that common inference-time remedies do not dissolve the illusion. Models remain overconfident on unfamiliar cultural questions, repeated sampling yields unstable rather than reliable correctness, and retrieval augmentation helps unevenly on long-tail facts. These findings indicate that cultural alignment cannot be inferred from multilingual ability alone and requires deeper intervention than calibration, sampling, or retrieval at inference time