@Alex782 Tell them if you can rebook you will refund. I doubt you will rebook also. Let your Moderate policy stand. It's what it's there for last minute cancellation protection.
FYI:
DO NOT CANCEL a reservation, DO NOT ACCEPT any message about cancelling, changing or refunding DECLINE it a loophole that comes back to bite you and gives guests back their service fees and/or voids your cancellation policy (changing dates) or the cancellation is now on you, not the guests (accepting cancellation). DO NOT REFUND anything until actual cash has been given to you by AirBNB. If you refund they will take the money from you and a lot of times guests get refunded from both AirBnB and you if you do this, then you have a fight to get your money back. Tell the guest you do not deal with the booking funds that is all on AirBnB's end.