Should I report an accepted PhD thesis in which the literature review is copied verbatim from sources?

This is of course a sensitive issue. However, the ethically correct behavior is to notify someone responsible about the problem. Etiquette says to go to the advisor first, as the advisor is the person who, after the author who committed the plagiarism, stands to lose the most from the accusation.

However, if you feel squeamish about doing it by yourself, you can talk to your advisor about the best way to proceed.

The main issue on your part is if you will need to rely on the plagiarizer's advisor for recommendation letters. Then you should definitely proceed with caution, and with the support of your advisor, department administrators, or both.

Of course, make sure that you've done your due diligence before going public with your charges, and to have the evidence with you when you meet with anyone about this matter.

My institution has a commitee in charge of this, does yours not have anything similar? There you can report such findings (even anonymously since the evidence is not depending on the person providing it). They will then decide upon the procedure to be followed.

Revoking a title is not an easy procedure in any case, also as there are large numbers of personal relationships entangled in it. I just know that almost any case where something like this happened, it ended in court.

The person did provide the citations, so for me it is not clear if legally this person did something wrong. I would first try and find this out before taking any steps. Of course, I would not accept this kind of verbatim copying if I were a supervisor. The angle on takes in an article is always a bit different than in the cited work. In addition, paraphrasing the text shows that you have understood what was written.

And be carefull how you deal with this, some people would not appreciate you being a snitch (in their view). However, I agree with @aeismail that it is the scientifically ethical thing to do to at least report this. And do get some backup from your own supervisor/professor.