My view will likely be somewhat controversial, but I thought I'd share it anyway since I don't think they're THAT unreasonable.
Personally, I think there are 3 things to consider:
- Is the act of incest illegal in your jurisdiction?
- Do you personally think incest is not right?
- Is there a strong taboo on incest in your surroundings?
If incest is illegal in your jurisdiction, there is no excuse: you need to stop them. They're breaking the law and they can get into serious trouble because of that.
If incest is legal, but you think it's not right, you have a good reason to tell them to stop it, especially if they are still underage and they need to listen to you. However, I personally think you should thread carefully here: explain to them why you think incest is wrong and why they should stop doing it. Otherwise they might not understand why this is important to you and why they shouldn't do it.
If 1 and 2 are not an issue, but the people that might find out think it's wrong, you should make a judgment call whether you want to risk it. And if there's no legal, personal or social barrier, then there shouldn't be a problem at all.
Contrary to what people believe, incest isn't THAT unnatural. it's not that common, true, but there are a number of animals that do it. And there are a number of quite well-known people that had relationships, and even married, with their relatives (like Einstein, or Darwin).
Finally, consider that this might just be some relatively "innocent" experimentation. There are mechanics in place from nature that prevent most people from falling in love with their siblings or parents. Your children might just be exploring their sexuality, and it's safer for them to do so with each other than with a random stranger that might abuse them.