I am feeling pretty frustrated to see so many people slagging off on the OP and on her DH. This is truly a difficult dilemma!
In order to do “the right thing”, she and her DH would have to face a major rift with the rest of DH’s family, in order to help a relative stranger. Failure to do that for his SIL who is not that close would not necessarily imply he’d fail to stand by his own wife.
In my view, the extent of the moral imperative to say something depends largely on the circumstances. If it’s a 10-year marriage with three small children who might be left homeless, then I think there would be a very strong moral case to say something and face the consequences. If, on the other hand, it’s a 2-year marriage of which 8 months were spent living apart, with no children, and if the SIL did not contribute to the deposit, and if for all we know her behaviour with BIL could have been lovely or it could have been horrid, then yes, she is being screwed out of some money, but it’s unlikely to be life-changing for her. Whereas, a major rift with her inlaws would be life changing for the OP.
@Returnofthemaccys: here is one idea: if it could be shown that preserving the secrecy would constitute criminal complicity in fraud by you and your DH, then it would be easier to justify doing what you feel to be the right thing. So if you can afford to hire a solicitor for 1-2 hours of advice, you would (I believe) acquire attorney-client privilege, and you could then describe the situation and ask whether saying nothing, while you have this knowledge, would expose you legally. Your hope, in a way, would be for the answer to be “yes”, because then it might become easier to persuade your DH to join you in helping the SIL, rift or no rift. Even if the answer is “no”, the solicitor might have some ideas how to intervene with plausible deniability.
From reading the link in an earlier post, it would appear as though the BILs planned actions clearly would constitute fraud, but the problem is that with the way he planning to execute, he seems likely to get away with it.
Finally, just for all those who would judge the OP - virtually every one of us is guilty of failing to do all that we could do in order to help others. Anyone who eats meat sometimes (which causes immeasurably more environmental damage than plant based food), or has an empty spare bedroom while some people are homeless, or travels by air for a holiday sometimes even though it causes carbon pollution, or who buys products whose components were made in places with imperfect labour standards, or who decides not to call an acquaintance or elderly relative who is lonely today because it would be tiresome, or who accumulates any savings while some people are in great material need, is choosing to put some needs of their own ahead of some needs of others. That is what the DP (and the OP) would be doing by maintaining silence on this issue in order to try to avoid having a family rift over it right now.
Putting some of our own needs first, some of the time, does not make all of us completely rotten, immoral, despicable assholes and cunts. Sometimes a situation carries a very clear moral imperative about which most people would agree. The diversity of responses and advice in this thread suggests that this is not one of those scenarios