I wanted to ask some advice from anyone who has been in a similar situation about how you handled this and dealt with this as parents and how you handled the family drama that may have resulted.
It came to my attention last year that MIL's partner, who she has been with for probably 12+ years now but they are only recently married, so basically my husband's step-father, has a history of sexually abusing a child in his own family. The child was a family member of his previous wife (now passed away). The details are all very convincing and I have no doubt he poses a risk to children. It went to trial, there was forensic evidence (semen), he was convicted and served a prison sentence. This all happened when MIL and he first started dating. My husband knew he had some legal issues in the past and had had to go to court, but he didn't really know the extent of it. He was 18 when they met and was living away from home, and then for part of that time was working overseas where we met. I honestly think he was happy enough that his mum had met someone and seemed happy that he never really thought to probe to much about this boyfriend who seemed to disappear and then re-appear. They never really talked about it.
Anyway, fast forward a decade, we are now married and have a 4 year old daughter. We've never been allowed to stay overnight at their house since our daughter was born. I honestly thought it was because they either didn't like me or didn't like our daughter. 
We live nearly 2 hours away, which makes visiting really difficult because 4 hours is a long time in the car with a baby and now toddler. BIL and SIL were always welcome to stay though, which is why I thought they obviously just didn't like us. But finally we got them to agree that we would all come for Christmas last year and we would all stay at the house together for the first time. Then a few weeks before Christmas, MIL called to tell us that the police wanted to speak to us as step-FIL is still on the sexual offenders registry and we aren't allowed to stay at their house unless we met with the police to be interviewed and give our consent for our daughter to be there. I could have punched her in the face! And if she had told us that in person, I probably would have, so I'm grateful she thought to call instead! Apparently, there was no plans to ever be honest about his past despite him having contact with our daughter because they were hoping they could just avoid saying anything until his period on the registry was up (he had to be on for 10 years) and then we never would have had to know the extent of it. The hitch was that the paperwork had been delayed in removing him from the registry, which they had hoped would be done before Christmas, but now would take several more months. He isn't allowed to be around a child for more than 12 hours without the parents giving consent and meeting with the police to be informed about his history of offenses against children.
So needless to say, this situation blew up after that because I was furious. I take these sorts of things very, very seriously. I have a history of sexual assault myself and I used to work as a social worker with vulnerable children, having had to report many incidents of abuse myself in my professional work. So this is a really big deal to me and they, of course, would have known that, which is why I suspect they tried to lie and cover it up. My husband and I immediately decided that step-FIL would have no further contact with our daughter. I have absolutely no reason to believe she has ever come to any harm. We only see them a few times a year. She's only 4 (and was 3 when this happened), and while MIL has babysat her at our house (with help from her sister, my husband's aunt who lives close to us), our daughter has never been left unsupervised at their house nor has step-FIL ever been to our house when MIL was babysitting (husband's aunt was there and can confirm this, I suspect she knows about his history which is why she volunteered to help so there was no chance step-FIL would be there). So though we have no reason to be concerned about our daughter's safety in the past, we are unwilling to even take the chance that anything could happen in the future and it was an easy decision to stop all contact with him.
Obviously this has been a massive blow to our trust and confidence in MIL and we set some very firm boundaries with regards to her future relationship with our daughter. She has never been very forthcoming about anything that has happened. She wholeheartedly believes that he is a 'victim' and he has suffered an 'injustice' perpetrated by this child's family and that any questions we have or any indication that we don't 100% trust him no questions asked is a sign that we are continuing to perpetrate this 'injustice' against him just like everyone else has. He very much has the classic abuser mentality that everyone is out to get him and the world has it out for him, which only confirms his guilt even more in my mind. MIL's relationship with him is very controlling and she is very manipulated. They put on a good front of being blissfully happy. But we have walked in on arguments they were having, as have BIL/SIL, where he speaks to her terribly and all is not as it seems on the outside behind closed doors.
As a result of this, my husband and I sat down and wrote out a list of questions for her/them (really, her but about the case and his restrictions in regards to children). Basically, we wanted to know the charges, how long his prison sentence was (we know he was in prison for 18 months, but that wasn't the whole sentence) and what restrictions he is currently under re: being on the sexual offenders registry. We wanted to make sure they were being totally honest with us and we wanted to check up to be sure that he hadn't violated any restrictions in regards to our daughter. We thought this would be an easy way to start the conversation, clear the air and get everything out on the table, and start trying to repair all the damage in our relationship with MIL so that she could continue having a relationship with our daughter. None of my family lives nearby and we only see them at holidays or birthdays a couple times a year. So my husband's family is our only 'local' family that my daughter sees more regularly. Without them, she literally only has us and an aunt and uncle (BIL/SIL), so it's important to heal this stuff as much as we can (except with step-FIL, obviously). We thought it wouldn't even be a big deal. Anyway, my husband went to deliver the letter and list of questions to her and talk to her, and she said, absolutely not, she would not answer those questions for us. We gave her a month or so of silence to think about it and asked again. She said no.
After that, my husband wrote her a very detailed and emotional email and explained how upset we were and how hurt we had been by all this, but how the only way forward was for her to start being honest with us and answering those questions was the first step. We had decided that if she was unwilling to have any sort of conversation with us about this then she would not be able to have a relationship with our daughter in the future. We hoped that this would at least wake her up to how serious this was. Her response was that if talking anymore about her partner's past was the only way she could be in her granddaughter's life then she would have to choose to no longer have a relationship with her because there was no chance that she would ever talk to us about the things we wanted to know. We were devastated, of course, but I was also really angry. My daughter had nothing to do with any of this and she is too little to understand why her grandmother has just vanished. I feel like our expectations were so lenient (several friends I have talked to about this situation said they would have cut both of them out from the start and never given her a chance to even have a relationship with our daughter again after knowing she conspired to allow a paedophile access to her).
All of this started last autumn and it's dragged on since. We can go a month or two without hearing from her and then she'll pop up calling and texting my husband like everything is fine. Or sending our daughter cards and gifts in the post. We then have to reiterate that she is no longer allowed a relationship with her (by her own choice) and that sending things in the post is inappropriate. Our daughter is old enough now that she knows how to spell her name and she knows when something is addressed to her. It puts us in the horrible situation of having to lie and take things away from her that she can clearly see are addressed to her. But I will not allow someone who won't participate in her life to continue to hold on tenuously by plying her with gifts. So this happens every few months and then it blows up again. In the midst of all of this going on, I got pregnant in February of this year and had a miscarriage in April, while dealing with this mess at the same time. I am very grateful to have gotten pregnant again straight away the next month and am now 14 weeks and all is well with this pregnancy.
But this situation continues to wear on me/us/our marriage. My husband is supportive and he agrees with the decisions we've made, but I can tell he is getting worn down by it all. We trade off having good weeks or bad weeks when we all but have a mental breakdown. Last week was a particularly bad week for me prompted by another letter from MIL about my 'unreasonable' and 'unjustified' behaviour in further 'victimising' step-FIL and another gift for our daughter (which promptly got sent right back return to sender). It makes me want to be sick to be honest. She has been notified by letter again that she has no relationship anymore with our granddaughter and basically to leave us alone.
I guess my reason for writing all of this (which I never intended to be quite so ridiculously long!) is to ask if anyone else has ever been in a situation like this with a family member who is a sexual abuser, but not involving you or your children directly, and how did you deal with it. This isn't just going to go away. They are married. He isn't going anywhere. He will continue to control and manipulate MIL. Even if she ever was to take our concerns seriously, start talking to us, answer the questions we have for her and try to heal the relationship between us which has been so completely fractured by all of this, honestly I don't know that I would ever want her around my daughter after all of this. It would have been different if she had been open and honest from the start when confronted and tried to help us to process all of this and if she had apologised. She has literally never once said, I'm sorry I brought this man around your child (and also my friends' children for that matter, he has attended my daughter's birthday parties with children running around everywhere and we had no idea).
But anyway, even if MIL had a change of tune tomorrow, I truly don't feel 100% comfortable that she wouldn't do whatever he tells her. What if he asked her to take inappropriate pictures of our daughter? She truly believes he is innocent. Would she chalk it up to that's nothing weird between a grandfather and a granddaughter to have a few pictures from bathtime? It makes me sick thinking about it. But we are going to forever have to be dealing with this because we have a large extended family and strong relationships with them that we don't want to lose just because we don't have a relationship with MIL. I've tried to find resources, but all I can find are resources for those who have been abused by a family member. That's not us, and I'm so grateful. But there is nothing out there on how to deal with having a sexual offender in the family and the strain that puts on family relationships. I guess I'm just looking to see if there is anyone out there who has been in a situation like this. I feel so lost some days dealing with it, and then other days so stressed out and angry. It takes up a lot of my time and emotional energy. Our family life has really suffered the past year, despite my husband and I doing our best to stay unified and be positive about it all. I know the stress is affecting our daughter.