A Bounty is a public reward of credits posted by the authorities to encourage the capture or destruction of a Commander who has committed a crime. It is the most common consequence of law-breaking in the galaxy, since most security forces lack the resources to pursue criminals beyond a given star system or interstellar territory. Lesser infractions are punished with Fines, while severe crimes such as murdering innocents, System Authority Vessels, or «clean» bounty hunters accrue Notoriety and eventually attract the attention of Advanced Tactical Response units. Bounties and Fines never expire, but can be paid off; Notoriety decays over time provided that the offender lays low.
Bounties (not to be mistaken for Bounty Vouchers) are earned for damaging a «Clean» player or NPC, committing certain crimes (e.g. trespassing), destroying property (e.g. Generators), and so on. Whilst there is a little leeway before earning a bounty, it seems to scale with whether or not the victim was actively targeted, the amount of damage inflicted, and the target’s resilience to that damage; a small ship will be less likely to receive a bounty from hitting a larger ship, whereas a large ship is far more likely to get in trouble for damaging a smaller ship.
Small bounties are limited to a Local jurisdiction; wherever that ship happened to commit a particular crime. However, if the bounty reaches a certain threshold (around 10,000cr) it is upgraded into an Interstellar bounty. That means if you manage to build up 10,000cr worth of minor bounties with a specific Federation-aligned faction, it’ll be upgraded to a Federation bounty; you’re fair game anywhere in Federation space. Note that having active bounties on your ship puts you at risk of random System Authority and Bounty Hunter interdiction whilst travelling in systems where you are Wanted.
Ships with a valid bounty in the current jurisdiction on them are marked as WANTED when targeted. Bounties for other jurisdictions can be revealed with a Kill Warrant Scanner; ships with bounties that are only valid in other jurisdictions will be marked as WARRANT. Destroying a WANTED ship awards Bounty Vouchers which can be redeemed at a relevant security contact or Interstellar Factor – but note that destroying a ship that has no valid bounties in the current jurisdiction is still considered a crime, even if they possess bounties valid in other jurisdictions.