I would say it is your decision, because it is the person who has to decide. But if they were aware of all these issues, I would point out the ethical issues. It's not necessarily clear-cut that a relationship a member of the family had at some point will continue in the future, or whatever. The circumstances of each case are quite different. That's the thing that has to be teased out in the course of looking at all the circumstances surrounding something.
The way you've presented this case doesn't have all the details you need to determine something. The Ethics Commissioner would show the pitfalls and do the best to give advice. Probably the best advice would be to avoid the situation if you possibly can, because it's dangerous.