She is a young child too young to speak up for herself, and you are her parent. Even if he is harmless, there may be another male figure who isn't. My sister and I were raised with an "Uncle Walter" who behaved similarly with both of us, although he wasn't in the early stages of dementia. One day when my sister was alone in the house with "Uncle Walter," he French-kissed her and put his hand up her shirt. She had just turned 14. I don't think any male of any age has a right to touch any female of any age without her permission, consent, and desire. FOR ANY REASON. I'd do whatever is necessary to get his physical attentions to stop, immediately. You don't need to overthink it or prepare a full-proof argument. Just say no.