Yeah. You report these things verbally in person, not on written media. This has two advantages: your employer can decide to investigate or forget about it, and you can judge whether you are getting a bad response in person during your report, and act accordingly.

You make a report in writing if you could personally be held liable, and you want your disagreement on the record. But doing so is a burning your bridges moment.

Not quite sure how you handle this if you are remote...

Which is why, shouldn't the right course of action be for that person to point out the potential problem (and in writing is fine), and a legal dept or exec to come back with a theory of why it's fine and we are going to continue doing it? - It's not like it's all that hard under the current legal system.

Things are much more likely to go sideways if (a) there was already some background feeling that this person had to go, or (b) the person makes a nuisance of themselves after legal or higher-ups have already decided that no, this was fine.

Seems to me when a manager "jumps straight to firing" someone, either they are insane or there is something missing to the story. Insane is very much not impossible (and disfunction itself obviously) but missing story is not impossible either.