This feels similar to asking devs to only use vim during a coding challenge and please refrain from using VS Code or another full featured IDE.
If you know, and even encourage, your employees to use LLMs at work you should want to see how well candidates present themselves in that same situation.
If this is just for a written part of the process or something, maybe I get it? But even then, if you expect employees to us LLMs I'd really want to see how well they interview with the LLMs available.
As an anecdote from my time at uni, I can share that all our exams were either writing code with pen on paper for 3-4 hours, or a take-home exam that would make up 50% of the final grade. There was never any expectation that students would use pen and paper on their take-home exams. You were free to use your books and to search the web for help, but you were not allowed to copy any code you found without citing it. Also not allowed to collaborate with anyone.