Suggests naughty kid is dishonest (7)
I believe the answer is:
implies
'suggests' is the definition.
(implying is a kind of suggesting)
'naughty kid is dishonest' is the wordplay.
'naughty kid' becomes 'imp' (imp can mean a misbehaving child).
'is dishonest' becomes 'lies' (to lie is to be dishonest).
'imp'+'lies'='IMPLIES'
(Other definitions for implies that I've seen before include "Suggests or hints at meaning" , "States indirectly" , "Insinuates" .)