In England, the rule is 2 hours per day. This 2 hours can be split over the day, but in a 24 hour period, if care is provided (outside of the child's own home) for more than 2 hours, then it must be registered care.
I seem to recall there is a loophole, which permits longer period of care to take place, but it's only for a set number of days per year - think it was 6 days. If necessary, you would need to look that up - but I suspect in your situation you know this person is caring for children for more than 6 days per year.
Continue chatting to her, see what information you can gather, such as how long she cares for the children, how often, also note regular routines such as walking to/from school (this information can help the regulator catch them in the act).
How does this person get their work? Could a friend of yours, contact her to ask about childcare? That way you can with luck find out about payments. The more info you can get, the better.
Suggest to her that she becomes a Registered Childminder (after all, the regulator will probably just insist that she registers, so will still be in competition). If you help her become legal (if she isn't at the moment), she may become your friend.