Implications if seller reports transactions as bitcoin transaction

If a bank pressured a seller about his transactions, and seller caves and reports that it was for bitcoin, the cash deposit buyer would be identified with having transacted in cryptocurrency, and would likely not even know of the disclosure, correct?

It’s strictly against Bisq trading rules. If it happens and is discovered during a trade and is provable, the offending trader would lose their security deposit. But you’re right that such disclosures may never be detected.

Bitcoin buyers should not…add any additional information in payment’s “reason for payment”