Really sorry to hear to the situation you are in Op. When I was younger, there was a big case of a paedophile ring being exposed in my hometown by a long term undercover police operation. One of the criminals was a prominent local minister. He was p/t chaplain at my school, one of his daughters was a few years above me.
His wife salvaged a lot of community respect and a decent life for her and her kids by basically cutting him out of their lives with a scalpel the minute he was exposed. He was never able to set foot in their house after the first time he was arrested and taken away, the wife never laid eyes on him again, filed for divorce the next day, went for full custody of the children and wouldn't let him see them again (easily done because he went to prison until they were past 18), went back to her maiden name immediately. The police "accidentally" showed her some of the materials involved whilst he was being arrested and she never looked back. As a result she and her children got a lot of sympathy and respect. So I think that is the way to go with your FIL. I think that stems from if you do that, people know you have done everything you can to break the chain/cycle, and people are very aware that child abuse does have a cycle, so can be wary even of the victims.
If your DH still wants contact with his dad, really try to convince him not too. Make him aware that people will, justifiably, be suspicious of him if he continues contact with his father. If that doesn't work, at the very least you have to draw the line round your children and say that DH can only see his dad by himself. If he won't respect that, then I think, sadly, you are looking at divorce and the courts.
I was friendly with a colleague in our 20s who had been a victim of family child abuse when younger, alongside her cousin. She had spoken up about it within her family and been the one who was condemned for making trouble. The abuser was a big deal in business and helped other family members both financially and in terms of business contracts, jobs etc, so her mother was very keen that the boat wasn't rocked for financial/social reasons.
It led to all kinds of problems like social estrangement from her mother (but not financial estrangement- her parents gave her a very substantial deposit for a house in London, paid for her frequent trips to the Priory for substance abuse and nervous breakdowns, plus private mental health care/therapy- there was some suggestion that some of this financial support came from the abuser).
Later, another, even younger member of her family came forward about abuse by the same person and the cousin who had been abused alongside my friend. My friend actually became one of the chorus of family voices who condemned the victim and told them to keep quiet, not to cause trouble and be grateful for all the support that family could bring.
At the point, I felt I had to put some distance into that friendship because she was putting financial support over the the safety of her younger relative, even though she had suffered the same abuse. I know it is a complex issue, and that my friend was still a victim but she had definitely crossed a line for me. She was also telling me at the time how she liked to re-enact violent rape scenarios with her then girlfriend, taking the role of the rapist herself, that she liked to verbally abuse and humiliate her girlfriend in bed and I just realised that as I wasn't clinically trained I was way out of my depth to give her any advice or support. She was also being open about how she wanted to extend their sex life to include anal rape re-enactment even though her girlfriend didn't want to do that, and it was becoming a heated issue in the relationship. She felt that as she had helped her girlfriend with a deposit for a flat and redecorating it to put up for rent whilst they lived together, that her girlfriend "owed" her the sexual leeway she wanted. (Girlfriend disagreed and fucked right off out of it, quite rightly so, moved into a shared flat to get away whilst she waited for her tenants to finish their lease. Friend was unhappy with that that as the rental flat was supposed to be the nest egg for their future.)
I'm mentioning this because I'm trying to illustrate the kind of intergenerational mess that can happen in these situations. I think you want to avoid coming even close to that, for you and your DC.