diff --git a/tests/unit/MemoryProxy.service.test.js b/tests/unit/MemoryProxy.service.test.js
index 0262da13..85e09cdd 100644
--- a/tests/unit/MemoryProxy.service.test.js
+++ b/tests/unit/MemoryProxy.service.test.js
@@ -1,30 +1,307 @@
 /**
  * Unit Tests - MemoryProxy Service v3
- * Tests MongoDB-backed governance rule persistence and retrieval
+ * Tests governance rule persistence and retrieval
+ *
+ * All MongoDB operations use in-memory mocks that faithfully replicate
+ * the Mongoose model interfaces. No database connection required.
  */
 
+// ============================================
+// Helper functions (function declarations are hoisted,
+// making them available inside jest.mock() factories)
+// ============================================
+
+/**
+ * Match a document against a simplified MongoDB-style filter.
+ * Supports: RegExp values, $in operator, plain equality.
+ */
+function mockMatchesFilter(doc, filter) {
+  for (const key of Object.keys(filter)) {
+    const value = filter[key];
+
+    if (value instanceof RegExp) {
+      if (typeof doc[key] !== 'string' || !value.test(doc[key])) return false;
+    } else if (value !== null && typeof value === 'object' && !Array.isArray(value)) {
+      if ('$in' in value) {
+        if (!value.$in.includes(doc[key])) return false;
+      }
+      // Other operators ignored — extend as needed
+    } else {
+      if (doc[key] !== value) return false;
+    }
+  }
+  return true;
+}
+
+/**
+ * Create a chainable query object for multi-document results.
+ * Supports .lean(), .sort(), .limit(), and direct await.
+ */
+function mockChainableQuery(resultArray) {
+  const chain = {
+    lean() {
+      return Promise.resolve(resultArray.map(r => {
+        const copy = {};
+        for (const k of Object.keys(r)) {
+          if (typeof r[k] !== 'function') copy[k] = r[k];
+        }
+        return copy;
+      }));
+    },
+    sort() { return chain; },
+    limit() { return chain; },
+    then(resolve, reject) {
+      return Promise.resolve(resultArray).then(resolve, reject);
+    },
+    catch(fn) {
+      return Promise.resolve(resultArray).catch(fn);
+    }
+  };
+  return chain;
+}
+
+/**
+ * Create a chainable query object for single-document results (findById, findOne).
+ * .lean() returns a plain object or null.
+ */
+function mockSingleDocQuery(doc) {
+  return {
+    lean() {
+      if (!doc) return Promise.resolve(null);
+      const copy = {};
+      for (const k of Object.keys(doc)) {
+        if (typeof doc[k] !== 'function') copy[k] = doc[k];
+      }
+      return Promise.resolve(copy);
+    },
+    then(resolve, reject) {
+      return Promise.resolve(doc).then(resolve, reject);
+    },
+    catch(fn) {
+      return Promise.resolve(doc).catch(fn);
+    }
+  };
+}
+
+// ============================================
+// Jest module mocks
+// ============================================
+
+jest.mock('mongoose', () => ({
+  connection: { readyState: 1 },
+  connect: jest.fn().mockResolvedValue(undefined),
+  disconnect: jest.fn().mockResolvedValue(undefined),
+}));
+
+jest.mock('../../src/utils/logger.util', () => ({
+  info: jest.fn(),
+  warn: jest.fn(),
+  error: jest.fn(),
+  debug: jest.fn(),
+}));
+
+jest.mock('../../src/services/AnthropicMemoryClient.service', () => ({
+  getAnthropicMemoryClient: jest.fn(() => {
+    throw new Error('API key not available in test environment');
+  }),
+}));
+
+// GovernanceRule: in-memory store with full Mongoose-compatible interface
+jest.mock('../../src/models/GovernanceRule.model', () => {
+  const _store = [];
+
+  const mock = {
+    _store,
+
+    countDocuments: jest.fn(async () => _store.length),
+
+    deleteMany: jest.fn(async (filter) => {
+      const before = _store.length;
+      const keep = _store.filter(doc => !mockMatchesFilter(doc, filter));
+      _store.length = 0;
+      for (const item of keep) _store.push(item);
+      return { deletedCount: before - keep.length };
+    }),
+
+    /**
+     * Process bulkWrite upsert operations in memory.
+     * Handles updateOne with $set, $setOnInsert, and upsert:true.
+     */
+    bulkWrite: jest.fn(async (operations) => {
+      let upsertedCount = 0;
+      let modifiedCount = 0;
+
+      for (const op of operations) {
+        if (!op.updateOne) continue;
+
+        const { filter, update, upsert } = op.updateOne;
+        const idx = _store.findIndex(doc => {
+          for (const [k, v] of Object.entries(filter)) {
+            if (doc[k] !== v) return false;
+          }
+          return true;
+        });
+
+        if (idx >= 0) {
+          // Update existing document — apply only $set fields
+          if (update.$set) {
+            for (const [k, v] of Object.entries(update.$set)) {
+              _store[idx][k] = v;
+            }
+          }
+          modifiedCount++;
+        } else if (upsert) {
+          // Insert new document — apply $setOnInsert then $set
+          const newDoc = {};
+          if (update.$setOnInsert) Object.assign(newDoc, update.$setOnInsert);
+          if (update.$set) Object.assign(newDoc, update.$set);
+          // Include string/number/boolean filter fields (contains the id)
+          for (const [k, v] of Object.entries(filter)) {
+            if (typeof v === 'string' || typeof v === 'number' || typeof v === 'boolean') {
+              newDoc[k] = v;
+            }
+          }
+          _store.push(newDoc);
+          upsertedCount++;
+        }
+      }
+
+      return { upsertedCount, modifiedCount, matchedCount: modifiedCount };
+    }),
+
+    /**
+     * Return all active, non-expired rules.
+     * Mirrors GovernanceRule.findActive() static method.
+     */
+    findActive: jest.fn(async () => {
+      return _store.filter(doc => doc.active !== false);
+    }),
+
+    /**
+     * Find a single rule by its custom id field.
+     * Returns a Mongoose-doc-like object with .toObject().
+     */
+    findByRuleId: jest.fn(async (ruleId) => {
+      const found = _store.find(doc => doc.id === ruleId && doc.active !== false);
+      if (!found) return null;
+      const snapshot = { ...found };
+      snapshot.toObject = function () { return { ...found }; };
+      return snapshot;
+    }),
+
+    /**
+     * Filter rules by quadrant. Returns array with .toObject() on each element.
+     */
+    findByQuadrant: jest.fn(async (quadrant, activeOnly = true) => {
+      let results = _store.filter(doc => doc.quadrant === quadrant);
+      if (activeOnly) results = results.filter(doc => doc.active !== false);
+      return results.map(doc => {
+        const snapshot = { ...doc };
+        snapshot.toObject = function () { return { ...doc }; };
+        return snapshot;
+      });
+    }),
+
+    /**
+     * Filter rules by persistence level. Returns array with .toObject() on each element.
+     */
+    findByPersistence: jest.fn(async (persistence, activeOnly = true) => {
+      let results = _store.filter(doc => doc.persistence === persistence);
+      if (activeOnly) results = results.filter(doc => doc.active !== false);
+      return results.map(doc => {
+        const snapshot = { ...doc };
+        snapshot.toObject = function () { return { ...doc }; };
+        return snapshot;
+      });
+    }),
+
+    /**
+     * General find with filter support. Returns chainable query with .lean().
+     */
+    find: jest.fn((filter) => {
+      const results = _store.filter(doc => mockMatchesFilter(doc, filter));
+      return mockChainableQuery(results);
+    }),
+  };
+
+  return mock;
+});
+
+// AuditLog: constructor-based mock with in-memory store
+jest.mock('../../src/models/AuditLog.model', () => {
+  const _store = [];
+  let _idCounter = 0;
+
+  /**
+   * Mock AuditLog constructor. Works with `new AuditLog(data)`.
+   * Instance has .save() that persists to in-memory store.
+   */
+  function AuditLogMock(data) {
+    _idCounter++;
+    this._id = `audit_${_idCounter}`;
+    if (data) {
+      for (const key of Object.keys(data)) {
+        this[key] = data[key];
+      }
+    }
+  }
+
+  AuditLogMock.prototype.save = async function () {
+    const copy = {};
+    for (const key of Object.keys(this)) {
+      if (typeof this[key] !== 'function') {
+        copy[key] = this[key];
+      }
+    }
+    _store.push(copy);
+    return this;
+  };
+
+  // Expose store for test cleanup
+  AuditLogMock._store = _store;
+  AuditLogMock._resetIdCounter = () => { _idCounter = 0; };
+
+  AuditLogMock.countDocuments = jest.fn(async () => _store.length);
+
+  AuditLogMock.deleteMany = jest.fn(async (filter) => {
+    const before = _store.length;
+    const keep = _store.filter(doc => !mockMatchesFilter(doc, filter));
+    _store.length = 0;
+    for (const item of keep) _store.push(item);
+    return { deletedCount: before - keep.length };
+  });
+
+  AuditLogMock.findById = jest.fn((id) => {
+    const found = _store.find(doc => String(doc._id) === String(id));
+    return mockSingleDocQuery(found || null);
+  });
+
+  AuditLogMock.find = jest.fn((filter) => {
+    const results = _store.filter(doc => mockMatchesFilter(doc, filter));
+    return mockChainableQuery(results);
+  });
+
+  return AuditLogMock;
+});
+
+// ============================================
+// Imports (resolved after mocks are registered)
+// ============================================
+
 const { MemoryProxyService } = require('../../src/services/MemoryProxy.service');
 const GovernanceRule = require('../../src/models/GovernanceRule.model');
 const AuditLog = require('../../src/models/AuditLog.model');
 const mongoose = require('mongoose');
 
-// Increase timeout for MongoDB operations
-jest.setTimeout(30000);
+// ============================================
+// Tests
+// ============================================
+
+jest.setTimeout(10000);
 
 describe('MemoryProxyService v3 (MongoDB)', () => {
   let memoryProxy;
 
-  // Connect to test database before all tests
-  beforeAll(async () => {
-    const mongoUri = process.env.MONGODB_URI || 'mongodb://localhost:27017/tractatus_test';
-    await mongoose.connect(mongoUri);
-  });
-
-  // Disconnect after all tests
-  afterAll(async () => {
-    await mongoose.disconnect();
-  });
-
   const testRules = [
     {
       id: 'test_inst_001',
@@ -50,9 +327,10 @@ describe('MemoryProxyService v3 (MongoDB)', () => {
   ];
 
   beforeEach(async () => {
-    // Clear test data from previous tests
-    await GovernanceRule.deleteMany({ id: /^test_/ });
-    await AuditLog.deleteMany({ sessionId: /^test-/ });
+    // Clear in-memory stores for clean test isolation
+    GovernanceRule._store.length = 0;
+    AuditLog._store.length = 0;
+    AuditLog._resetIdCounter();
 
     memoryProxy = new MemoryProxyService({
       cacheEnabled: true,
@@ -63,12 +341,6 @@ describe('MemoryProxyService v3 (MongoDB)', () => {
     await memoryProxy.initialize();
   });
 
-  afterEach(async () => {
-    // Cleanup test data
-    await GovernanceRule.deleteMany({ id: /^test_/ });
-    await AuditLog.deleteMany({ sessionId: /^test-/ });
-  });
-
   describe('Initialization', () => {
     test('should connect to MongoDB successfully', async () => {
       expect(mongoose.connection.readyState).toBe(1); // 1 = connected
@@ -165,7 +437,7 @@ describe('MemoryProxyService v3 (MongoDB)', () => {
     });
 
     test('should load from cache on second call', async () => {
-      // First call - from MongoDB
+      // First call - from mock store
       await memoryProxy.loadGovernanceRules();
 
       // Second call - from cache (much faster)
@@ -195,6 +467,9 @@ describe('MemoryProxyService v3 (MongoDB)', () => {
       // Clear all test rules
       await GovernanceRule.deleteMany({ id: /^test_/ });
 
+      // Clear cache so it reloads from store
+      memoryProxy.clearCache();
+
       const rules = await memoryProxy.loadGovernanceRules();
       expect(rules.filter(r => r.id.startsWith('test_'))).toEqual([]);
     });
@@ -365,7 +640,7 @@ describe('MemoryProxyService v3 (MongoDB)', () => {
       // Wait for cache to expire
       await new Promise(resolve => setTimeout(resolve, 150));
 
-      // Should reload from MongoDB (cache expired)
+      // Should reload from store (cache expired)
       const allRules = await shortTTLProxy.loadGovernanceRules();
       const testRulesLoaded = allRules.filter(r => r.id.startsWith('test_'));
       expect(testRulesLoaded).toHaveLength(3);