The emergence of Generative Artificial Intelligence (GenAI) has reshaped higher education with both promising opportunities and significant challenges. Yet little is known about how global educational policies are evolving to address the assessment challenges posed by GenAI in terms of 'ethical considerations.' Additionally, current research has yet to thoroughly pinpoint potential pitfalls in existing policy areas that require further policy development attention. This review seeks to fill this gap by reviewing the existing literature over the last three years since GenAI's emergence, focusing on ethical guidelines in assessment. It also aims to offer policy recommendations to address these issues through this central research question: "What ethical guidelines can be established to leverage generative AI in higher education assessment while ensuring academic honesty and reconsidering the concept of academic integrity?" We followed PRISMA to select articles for this literature review. This review revealed that GenAI has greatly impacted assessment in three main ways: disrupting traditional ways of assessment, raising concerns about academic integrity and ethics, and necessitating the urgent need for a clear ethical framework for the responsible and productive usage of GenAI in the higher education context. This review also offers four critical insights into the existing research on policies: advocate for assessment strategies in adapting policies to encourage the ethical usage of GenAI, consider that reliance on AI detectors is inadequate, reconsider 'originality' and 'academic integrity' in the context of the GenAI era, and suggest frameworks to establish ethical guidance.