Wrongful arrest by SysDef?

Got flagged for contraband on my ship when flying to The Eye, despite me having just sold all my contraband at The Den over in Wolf. Went back to a previous save, checked ALL inventories of my ship, my crew and myself, no marked contraband to be seen. Even changed up my ship layout to send loose items to the cargo hold so I can check there too. Nothing. So I'm confused.

I did notice I had some Squall on me, but it isn't marked as contraband. But I discarded it nonetheless, just in case. Still getting flagged for banned goods by the folk over in Jemison. I don't understand if this is an intentional quest, I never had this happen on my previous character. They wanted me to go undercover for the crimson fleet for them, but I refused because I have no interest in doing so, so instead I get hit with a XP loss for staying in jail (yeah yeah I KNOW I could just accept and then never do it, but penalizing me for not doing so and gaming the system by just ignoring it seems wrong?).

Is there some sort of item that'll get you flagged that doesn't carry a contraband marker? Is this an intentional questline? I'm so lost here.