WS are issued out to a couple of people when someone gets wacked, this means they were present at the murder, so the murderer must have seen them?

What if on the WACK screen there is an option to Pay off or Intimidate witnesses? If the option to pay off is selected, an amount of money is entered and the person who receives the WS has the option of accepting the bribe and not viewing the WS, or declining it and getting it as normal.

Intimidation would work the same, only if they Are Intimidated then nothing is said and they don't see the WS, if they are Not Intimidated then there is some sort of penalty that both parties suffer, but they get to see the WS. I've not come up with much idea as to what the penalty would be, maybe a restriction on traveling or shooting, or general crime. Maybe the person who is intimidated has to lay low for a few days so cannot do anyting but message. This penalty would have to have affect on both parties though to ensure balance. 

So, in conclusion:

Player 123 WACKS someone, and selects to Pay Off Witnesses to the tune of $5,000,000

Player ABC receives the Notification and decides to accept the bribe and gets the cash OR refuses and views WS as normal. 

Player 123 either loses his cash but remains annonymous OR keeps his cash and is revealed to witness.

OR

Player 123 WACKS someone, and selects Intimidate Witnesses

Player ABC receives Notification and decides to Be Intimidated, the WS remains a secret OR is Not Intimidated and suffers a restriction on his movements and actions for a day or so.

Player 123 will receive a penalty either way to avoid abusing the functon, it will either be a small one for successfully Intimidating, OR a more serious one for failing. Either way, it would have to be more serious that Player ABC's penalty to avoid abuse, like I said. Depending on the number of Witnesses will also determine the penalty.

There could also be the possibility of introducing the option to Intimidate or Pay off after the WACK, so you can decide how much to pay or to Intimidate or not depending on the number of people who witnessed it "You WACKED Player 123, however it was witnessed by 2 people"

It might not be fair on someone who receives a notification that they either ignore the WS or get intimidated, but it's the mob, you are implicated in the situation and you got to deal with it. The murderer in the situation will have to have good reason to use the option. 

Something I forgot to add:

This will encourage more high profile killings, if someone displeases you or insults a family member, the family may fund for the kill to be made. There is a risk of it not being accepted but then, its the Mafia.