Not necessarily.
Hate speech is bannable.
If someones using the N word with a hard R, they will be punished. However, if no one reports them, I dont think the system will pick up on it. (Reports flag the games, then the punishment system reviews "Flagged" games)
Alot of the time I see the N word with an A its friendly talk. As a black man myself, most people in my social circle use it as a replacement for friend/homie.
While I still wont throw it around in game, as some people have very fragile emotions. It's not inherently a bad word when used correctly.
This is all speculation though, who knows what Riot's real stance is on this.
Regardless of EVERYTHING mentioned in this post, theres no real reason aside from self gratification, to notify someone when a player is punished. If you don't think the punishment system works, go be excessively toxic for a few games, and see how quick you get punished.
(You wont, because you know the system works well enough to catch you)