Reactions involving weakly bound nuclei of ⁷Li show large yields of α particles that have their origin inelastic breakup, breakup followed by fusion, or triton transfer. The latter two processes, breakup fusion and transfer, have similar characteristics and produce the same residual fragments. We report here results of exclusive measurements of charged particles and characteristic γ rays from the heavy residues in the ⁷Li+¹⁶⁵Ho system at 42 MeV (E/V_b≈1.6) to look for experimental signatures to differentiate between transfer and breakup fusion.Such a distinction is essential for a better theoretical understanding of both the fusion process and direct reactions involving weakly bound stable and unstable beams.