And make it so they have to turn in the player's head for payment. I'd be ok with it even being an automated system.
Ex.
Acebane is a murdering scum bag and Vengy is an innocent player in the graveyard. I decide to kill Vengy because I'm a scum bag. Vengy reports me for murder. Just then, a bounty is then placed upon my head for say 50 silver(how much it should be is debatable). Other players can submit money to the bounty personally as well such as Vengy saying "only 50 silver? I want this sucker dead! I'll submit 2g more ontop of that 50 silver." Now in order for another player to claim the bounty they must interact with the bounty board and accept a "task" from it to become a "legal bounty hunter". This will then allow that player to be a bounty hunter and kill me REGARDLESS of my flag status in any city at any time. However, that bounty hunter is now accepted that they can too, be killed at any time and any city by the intended bounty (cannot report the murderer as a murderer again if killed). This system allows "innocent" players to still fight to the death regarding bounties and with no interference from others. That way only the bounty hunter can loot the murderer's head (assuming not in wild) in the city and go turn it in. However if in the wild, anyone can loot it and can still earn the reward for the murderer's head. But only the Bounty Hunter is legally allowed to do it in cities.
I think there are obvious balancing concerns such as friends purposely killing the murderer to split the bounty reward. And there's a million different possibilities that could be better. But I think a system like that would be good for Mortal Online 2 where you think twice of murdering a player (if you're "innocent" 5 minutes later) because then you could be hunted for it at a random time in any other city you go to. And if you're a red player (mass murderer) well you wouldn't care anyways because you cant enter cities to begin with.