Azure Information Protection Scanner Retention Labels

@jpcapone
Thank you for your post and I apologize for the delayed response! Based off the AIP scanner's process, it doesn't look like it applies retention labels, only sensitivity labels.

I did some more research to confirm this, and can see that a retention label and sensitivity label are two different features. A retention label allows you to retain or delete content, and can be automatically applied via retention policies. Sensitivity labels from the Microsoft Information Protection solution, lets you classify and protect your organization's data.

When it comes to the AIP scanner's process, it runs through:

1. Determining whether files are included or excluded for scanning
2. Inspecting and label files
3. Labeling files that can't be inspected

To classify and protect your files, the scanner uses sensitivity labels configured in one of the Microsoft 365 labeling admin centers, including the Microsoft 365 Security Center, the Microsoft 365 Compliance Center, and the Microsoft 365 Security and Compliance Center.

Additional Link:
Automatically apply a retention label to retain or delete content

If you have any other questions, please let me know.
Thank you for your time and patience throughout this issue.

----------

Please remember to "Accept Answer" if any answer/reply helped, so that others in the community facing similar issues can easily find the solution.