This is already currently possible by submitting support tickets. With the coming in game system, it could also be used for such a report.
As for how it will be handled, we have a standing policy to not discuss disciplinary actions, and this is included in the Code of Conduct. The reason for this is not in any way to hide or shadow how we operate for disciplinary actions, but due to the harassment it may draw to players which may receive associated actions.
More serious ToS violations are handled by us here directly at EHG, rather than community moderators, and are currently handled on a case by case basis. With multiplayer launch, we would be implementing more clear outlines regarding cheating through various methods in Last Epoch. To be clear, with multiplayer there will be a zero tolerance policy regarding cheating, but we would want to ensure this is clear to all players to know what to expect.
Reported cases of offline ToS violations, such as content creators violating the ToS to create content, would continue to be handled on a case by case basis. Community events, and things such as leaderboards are currently planned to only be available for online players for greater integrity.