I agree with what others have written. Your daughter is your top priority here. I also suggest that you tell your sister (as gently as possible, but without hiding anything, either) that either the behavior changes or they find a new place to stay.
Personally, I suspect that the behavior won't change, especially if your sister is justifying it by saying that your child is too sensitive. I call this "blaming the victim" and adding insult to injury.
That said, I'm only offering an opinion based on a single message that you wrote. Do you know what's driving the behavior?
