If you have evidence that a murder is about to occur, you report it to the fucking police. You don’t just remove yourself from the pipeline and hope it doesn’t happen.
And there are also cases in which you can clearly know something is illegal. Someone purchasing guns in a country where guns are not legal doesn't need a judge, jury, and court process for a payment processor to decide they don't want to be involved. It's not arbitrary. And your right to make purchases using a credit card is not a basic human right.
In reality I don’t think there is any chance of a law requiring payment processors to process all legal transactions and definitely nothing about illegal transactions. If that were a possibility, I would back off my statement that they should be forced to process illegal transactions.