No, I think this is a misconception. Sanctions can work without government controlled money. Prosecuting terrorism or organized crime can be done without government controlled money. Catching tax evaders can be done without government controlled money. Everything can work without government controlled money, it just requires more on the ground police work. All of these things were done without government controlled money not very long ago.
Similar to how the job of police would be a lot easier if every citizen was required to carry a surveillance microphone, their job is easier if all transactions are can be censored and surveilled. But it is not necessary.
For example, sanctions: Find people who are trading with a sanctioned regime by looking at if they are importing goods from there. Very easy. If they are paying for labor (remote IT work or something), you can also catch that. Informants, etc.
Sanctions only work that way in a world that doesn't exist - one with 100% agreement and compliance with sanctions at a nation-state level. The reason monetary controls are so critical to sanctions is that they make it more difficult for the countries that don't want to abide by the sanctions to do bypass them. Not impossible, but more difficult.
Similar to how the job of police would be a lot easier if every citizen was required to carry a surveillance microphone, their job is easier if all transactions are can be censored and surveilled. But it is not necessary.
For example, sanctions: Find people who are trading with a sanctioned regime by looking at if they are importing goods from there. Very easy. If they are paying for labor (remote IT work or something), you can also catch that. Informants, etc.