My twin sister bathes with the little boy we babysit.

I have a few different thoughts. Firstly, I've worked with kids and teens in a 24hr setting for many years. Some may disagree, but a 12 year old boy IS getting sexual satisfaction from being bathed the situation. Both parties may be completely innocent, but it is still happening to some degree. Some have brought up the point that in some cultures its normal, not sexual, etc, but the fact is, in the U.S., your sister can be considered a sex offender. What happens if she gets into an argument with him, and he tells to get back at her? or uses it as blackmail?
There is a thing called mandatory reporting. This means that when certain people even have a hint this is happening, however innocent, they are required to report it to CPS.
The main point is that having knowledge of the laws, she needs to know that there could be jail time, and her being added to the Sex Offenders list for the rest of her life. This can happen even if his parents don't have a problem with it.