I wouldn't want to alert the fake SINner that the system is on to her. I also wouldn't want a dumb employee to go on a power trip and try to detain the person or obviously call the police. If necessary, the system could discreetly alert the authorities after the ID check fails.
Certainly would be nice for law enforcement if a SIN was silently tagged as misused...a bit like the delayed bans Valve hands out on Steam. But who is the authority to go to when a dead Ares SIN gets used at an UCAS shopping mall which contracts LS for security? I say tell them there is something wrong with the SIN and have them decide what to do themselves.
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I'm not saying that numerous flags would not be a part of the system itself, just that they would not be accessible by just anyone. The criminal SIN flag, for instance, might show itself on queries by law enforcement or an authorized background check, but not necessarily when you receive a package or download a library book.
Makes sense, a store would just get back a "verification failed", while a police device would tell whether the verification failed because the fingerprints didn't match, the bearer is dead, or because the SIN never existed.