Do you ever get a headache? That is the mind reading chip google had implanted in your head at birth. They know EVERYTHING you do. Buying links is a normal part of internet activity. Its perfectly ok to buy and sell links. Its when you buy links to improve your page rank - that is what google does not like.
That's right. they don't *know* Unfortunately, they dont' *have to know*. They just have to have suspicion. They can and do ban sites for any reason that enters their nerdy little heads.
I actually see it the other way around. I think they are very conservative before giving a googlespank. I've reported very obvious paid links by competitors many times but there is never any result. Also reported cloaking and gateway pages many times which have been up and ranking number 1 for years.