I am a GP Araabra and carers of my own children as they were growing, including their grandparents knew not to spank them. I think had my children told me that their grandparents had spanked them or if I had seen their grandparents spank them then I would have removed my children, insisted on a meeting between all adults, expressed my feelings and then given them a "one strike and you're out" warning, would I have cut them out 100%, probably not, more than likely just temporarily in the hope that they might reflect on their behaviour. I would never have allowed them unsupervised contact again though and would have kept a very close eye on things.
Of course if spanking of my children or any other abuse continued indefinately then yes, for the sakes of my children their grandparents would have had very limited closely supervised contact.
But, that's me, how I would have handled the situation had my children been abused physically, mentally or emotionally by their grandparents.
Forgive me for not understanding what you mean by grandparents being cut off for financial abuse ?