It is, but does it actually happen ? My first roll as Atilla I cleared my continent (Civs and CS's) before finding out about the rest of the world. There was a city state off the continent that was wary.
Japan knew the CS and was guarded. Don't recall if this was just Japan being Japan or if there was a warmongering penalty involved.
I can say that the Civs that were not close to that city state knew nothing and I did not have a diplo penalty.
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