Sadly, there are many layers to this situation that make it very, very challenging to deal with. You are caught between the need to protect your children and the pressure to keep peace in the family.
The cousins are sexually assaulting younger, more vulnerable children. Your instincts are right. Your children and your sister in law’s children need to be protected. The situation has gone way beyond normal exploration that goes on between kids. Your four year old is hurting and she is telling you in the only way she can how fightened and upset she is.
Another concern is that this is not normal behavior in a 10 year old or her younger sibling. There are several possibilities: It is possible that these children are mentally ill and sexualized activity is a symptom of the illness. However, it is quite possible that someone is sexually abusing them and they are acting out what is done to them. Victimizing others may be the only way they have of expressing that they are also victims. Or it may be that sexual abuse of children has become such a usual behavior in this family that the adults have lost the ability to see that it is wrong. Then again, it may be that they absolutely do know that it is wrong but feel so overwhelmed and scared by the issue that they can’t face it or can’t bear to reveal a shameful family secret. Perhaps you have an intuition of which of these possibilities (or another) is at the root of the problem.
Regardless of the cause, the ten year old and her brother need treatment. The younger kids need protection and probably also need to be seen by a counselor who understands the effects of sexual abuse in a family. All of these kids need loving adults around them who will take charge and make sure that they are all safe.
You are in the very uncomfortable position of being the person who is pointing out that there is a serious, serious problem in the family; a problem others don’t want to see. If the issue is too hard for them to face, they may choose to evict you from the family rather than deal with it. Of course, the problem won’t go away. It will probably get worse. And the children will end up even more hurt and less trusting of the adults who say they love them. I hope your sister-in-law and her and your husband can join with you and support you for the sake of the children. I hope that together you all can find a way to preserve family relationships while still dealing with something that is so, so difficult. If not, I hope that at least the children get the protection they deserve.
I wish you well.