This sure sounds like fraud to me. I don't think there is much of a question here. This is dishonest, and it is taking money from your company that doesn't belong to you to give something to your family member that doesn't belong to her.
I agree with you. I wouldn't do it. I would tell my family, calmly but forcefully, that there is no way in Hell that I am going to do this.
Stick to your sense of right and wrong. It is what defines us as people.