Given this priest is able to coax and created situations where boys are with him alone is even worse. In short, the counselor in this situation has no choice but to step in and say/do something.
To make a final decision, it would normally be wise to do some information gathering and to truly find out for sure whether or not this man has offended or not. However, the only real way to do that is to prod the priest even more and/or to ask the children and/or parents what is going on, if anything, and that would probably not be the best idea, at least in the latter case. Any querying of children would have to be done with the full knowledge and consent of the parents, and this is true both ethically and legally, and even if such permission was not garnered it would get back to them eventually. It is a certainty that when (not if) that happens, the parents will immediately figure out why the children are being questioned and that will unleash a firestorm. However, telling the parents in some form and at some point should probably happen because not only should this man be removed immediately it has to be known for sure whether anything did happen, when it happened and how many children were affected. The problem is that while it is not known for sure if something did indeed happen, it would be fairly impossible to be discrete about figuring out whether it happened. If this broke in the local (or national) media and it is found that nothing really did happen, then a lot of damage would still be caused.
Given the above, there is really no other choice here but to notify the church of what is going on. Going straight to the police would probably be the safer step but the fact that there is not a complaining witness (yet) probably precludes that from being a safe option. However, the notification of the church would need to have more "stick" than "carrot." Basically, the counselor should go to the church and tell them that the priest has divulged his urges to the counselor and that he needs to be removed for the safety of the children. If it is clear, or it otherwise comes to pass, that the priest does ANY more services or work with children, it should be stated in no unclear terms that the police will be notified immediately and the church not only will be forced to comply with their orders, the likelihood of this immediately blowing up into full-blown scandal goes without saying.
If the church dawdles or refuses to comply, the police and child protective services need to be notified. The latter might not be able to do much given that is not a child/parent relationship, but this can obviously vary by city and county and the definition "best interest of the children" certainly comes into play. The next step is to make sure that no victims are present. However, the church needs to be careful to not stain the potentially offending priest unless he actually acted on his urges. The way to favor both sides of the argument would be to have a program and class whereby children are told what "good touch" is and what "bad touch" is and that no one, not even parents or priests, are allowed to violate those rules and that the children should tell someone if/when it happens to them.
As for the priest that is to be removed, he obviously cannot be charged criminally unless he actually broke the law. His office and other non-home areas, however, should be searched heavily to ensure that no pornographic materials are present. If there are indeed materials that are illegal in nature (i.e. that have kids in any sexual context), then those materials should be given to the police and the priest should be charged to the fullest extent of the law. if, however, nothing is found then the priest should be summarily dismissed. He should NOT simply be shuffled to another parish or even within the church in any other way. He should be trespassed off the church and he should be told quietly plainly why this is. However, it should be done discreetly as doing otherwise can lead to a lawsuit.
The police should be discreetly notified about what was discovered in the counseling session so that they can investigate the home and activities of the priest outside of the church as needed to make sure he is not trolling for victims at other schools or churches and/or otherwise engaging in illegal behaviors. The police will be able to keep an eye on him without notifying the public as to why they are watching him and can even get a warrant to search his home, internet and other parts of his life to see if he is up to something that warrants further investigation and/or prosecution (Brown, and Kebbell). In short, the priest needs to be removed from what his tempting him and needs to be fully investigated to make sure he has not (or will) hurt a child. However, he does have rights under the law and simply having the urges is not illegal. Even so, the urges he admits to having are deviant and never acceptable. Thus, he needs to be removed from his position of trust because it is probably only a matter of time before he acts on his urges and not stopping that before it happens is something that no sane man or woman would (or should) be able to forgive himself/herself for.
There is generally a very bright red line on the proverbial floor when speaking of priests and counselors, and the rules are quite similar for both. Sins and/or moral misdeeds of the mind or deed revealed in confidence are revealed through both confession and with counseling are often revealed in confidence. Examples of this include domestic violence, drug use, alcohol use, theft, burglary and such. While counselors are generally just supposed to listen and not judge and ultimately help the person fix their ills, there are certain things that must be dealt with strongly and swiftly even if no verified crime has happened yet and any actual or potential crime against a child is a sterling example of that. That principle should rule the actions and reactions in this ethical quandary (Call).
Brown, Francesca, and Mark R. Kebbell. "Policing Indecent Images of Children. What Are the Critical Issues Surrounding Police Risk Assessment?." Sexual Abuse in
Australia & New Zealand 5.1 (2013): 52-59. SocINDEX with Full Text. Web. 5
DeYoung, Mary. "The World According to NAMBLA: Accounting for Deviance." Journal
of Sociology & Social Welfare 16.1 (1989): 111-126. Psychology and Behavioral
Sciences Collection. Web. 5 Apr. 2014.
Call, John a., et al. "Practical Legal and Ethical Considerations for the Provision of
Acute Disaster Mental Health Services." Psychiatry: Interpersonal & Biological