Whether there is something to 'deal with' rather depends on the nature of the relationship between them.
The uncomfortable truth is that it is far from unusual for adolescent boys to fool around together between the ages you describe, and far from unusual between cousins too. Most boys grow out of the friends-with-benefits arrangement when they start dating properly - be it with the same or opposite sex - or when they get worried about knowledge of it getting out, but others will continue until they start getting regular sex from romantic partners or even beyond. Their being cousins gives almost an extra incentive to be discreet and not let it get out at school etc, although the distance presumably also removes most opportunities.
The fact that they are cousins does NOT make it a police matter - in the UK it's completely legal between first cousins. There's no age difference, so as long as they both have the mental capacity to consent and there's no element of coercion I wouldn't worry about a knock on the door from the police at all.
If you're satisfied that they are safe, it's all consensual, and it's just a case that they've been fooling around because the other one is convenient and are still doing so, I'd butt out and learn to make a lot of noise when approaching the door.
If they are romantically attracted to each other, that's a different kettle of fish. Like I said above it's not illegal, but most people would find it a bit icky at the very best and you'd need to have an honest conversation with your son about what the rest of society would think if their relationship became public knowledge.
As for BIL - you know him and your family dynamics best. For me, whether to tell him depends on what the boys' relationship is and - more importantly - where it's heading.