Just because they are family doesn't mean they are entitled to do anything. To steal is to steal, no matter who is doing it.
Maybe your son is a sweet kid who sees the good in everyone, but that doesn't mean that everyone is a good person. I do believe that it is hard and something that shouldn't be done to condemn an 8-year-old kid as a bad kid or a bad influence. He is a kid; he does not influence others because he hasn't even developed a personality yet. But if a kid is showing signs of not being very kind, then probably their parents aren't doing a good job, or at least they aren't paying the kid enough attention. An 8-year-old kid who steals money from his cousin is most likely screaming for attention from his parents. That is way more common than a kid being a bad person. I'm not a child psychologist or anything, so I could definitely be wrong with my calling. But I do believe that this is not a bad kid, but just a kid who is looking for some attention.
In this case, I do think that it is best to get the son away from his cousin. This cousin isn't treating the other kid with respect and is causing distress to him and his family. So, it would be best to separate them to deal with this situation and to avoid the cousin taking more advantage of the son. It seems like a case of idealization of the son towards the cousin. The kid sees him as his only friend and with respect and admiration. The cousin most probably knows this; that's why he takes advantage of the other kid. He sees him as a way to get things done and to get things, not as a genuine friend. This is not a healthy dynamic in general, but with children it should be fully avoided. It's not okay to let them act this way. The mother already tried talking with the other parents, and after getting nowhere, I think she should take the matter into her own hands.
If I were in her situation, the first thing I would do is talk to the son. He needs to understand why you would be doing what you are doing, to avoid any kind of future resentment. The kid is not dumb, just young, so explaining why this situation is wrong seems like the best way to act. After that, I would talk with the parents of the other child and demand that they give back the money; it is not for the money directly, but more because of the principle. And lastly, I would not invite the kid anymore. I would also try to get help from a psychologist or the school to help the son get better at socializing so he gets to make new friends who aren't using him. In the end, I would hope for the other kid to resolve his issues, and for his parents to help him out.