Well, in theory, the message log notes timestamped messages for awarding fm, character level ups, etc. So that stuff might be tracked even if your survival time isn't.
Exactly, that is tracked for sure. If you clear 10 Nightmare survival in 9 minutes, well, of course there's something wrong.
Anyway I think they'll just roll back FM and maybe give a temporary ban, I doubt they will ban so many users, considering they still plan to release DLCs for the game. The game sold around 180k on PC, even if, let's say, 40k users used the mod, is still a lot of money for Capcom to give up.