If anyone is willing to share, are others identifying Manufactured Spending in transaction activity alerts, and how are others dealing with monitoring and differentiating it from potential ML?

I've done my darndest to try and point to something that makes inflating credit card spending for the purpose of boosting rewards illegal but I can only land at it being potentially unethical.

Any feedback is appreciated

You are correct that it is not illegal, nor do I believe it will ever be illegal.

If this is your own card program I would include a paragraph in the disclosure that addresses this and that any card involved in this activity will be closed or have the reward program removed.

As far as ML is involved, we primarily watch for the cash side of the laundering activity and back in from there.