In my opinion, involving the professor/lecturer should generally be the last resort since managing interpersonal relations in a uni/project group is for better or worse part of the experience.

If she turns it in, it will likely contain a signature and will be an official exam document. Then it's likely she fails if it comes out.

If she hasnt turned it in, I suggest to your sister to make an appointment and negotiate about pushing the deadline a week further. This shouldnt be an issue as long as she gives a good reason. She should also try to create a situation where she is graded independently, e.g. by disclosing the plagiatism.

If she has turned it in, maybe she will get lucky and if she is, it's not the end of the world and teachable moment.

Profs may be unwilling to deal with intergroup conflicts but they tend to be able to separate the wheat from the chaff.