The octogenarian started claiming welfare in Italy in 2004 and is thought to have received nearly 90,000 euros in benefits over the years, said news agencies on Thursday.
According to Milan's Corriere della Sera the particular social assistance she claimed was intended to help over-65s living in poverty.
The supposedly destitute woman had also recently put in a claim to the authorities of the Gallarate commune in Italy for housing benefit to help pay her rent.
But she is now being investigated after finance authorities in Varese, northern Italy, discovered the woman had a bank account in Switzerland containing around one million euros.
She had also recently initiated proceedings to bring the funds back to Italy, said the media.