Is it against the law for grandson to take dementia grandma's money?

I'd be very angry, too, if I believed my nephew were doing this.

But before I did anything about it I would check the facts, and I would talk to him.

Just for example, your MIL's assertion that she gave her cash to her grandson is not necessarily reliable; there are - sadly - many ways for cash to go missing in ALFs.

It's also possible that she presses the money on him and it hasn't crossed his mind that he should refuse it, or accept it but then discreetly return it to her purse. How old is he?

Meanwhile I would put her money in safer keeping, I agree with others' suggestions.

The $100 a mo cash to her gets stopped cold starting in January.
Hubs has to tell mom it’s a new policy for 2019 and she’ll likely totally accept this.

Between now & then, Hubs - assuming he’s the DPOA -has a talk with the SW or billing office at the AL as to changing her personal allowance distribution. Whomever is her dpoa can do this and have a ledger done for signing out or cashing any checks over $20 with a list of those allowed to withdraw. Grandson not on list.

His Mom can get like $20 a week if she’s the type that needs to have a pocketbook with cash in it. If she still gives the $20 to the kid, it’s like Margaret said, it’s a “bad choice she can do”.

If grandson has addiction issues, I’d be on alert that he gets her to or has gotten her to co-sign for things & unbeknownst to you. There’s been posts on this site of grannies co-signing for used cars, private student loans, cell phones, etc and all done thru bottom tier type of lenders who accept her signature without her presence. The grandkid makes the minimum payment or enrolls for the minimum # of hrs required so it doesn’t surface. But it will eventually and it’s her debt. The only way around it is that she files a police report and lil’ Sonny knows grannie won’t do that. You might want to troll his FB as to new stuff bought and make notes or take screen shots to have a history.

I’m guessing this Isn’t your kid, But rather hubs’ sibling(s) kid?

How about a post on Facebook about where the money is coming from? What do his parents think about it? Or your husband, her son? Does a family member have a POA or guardianship? You may not be in the best position to deal with this. However to answer your main question, unless he is threatening her or defrauding her in some way, it probably isn't illegal. It's one of those 'bad choices' people have the right to make. The dementia makes it more tricky, of course.

Is it possible for you to ask the administration to keep her allowance for her and give her money when she asks for it? My mother’s facility had an account set up for each resident. They would give her money as she needed it. I would also tell them not to give money to anyone but her.