How does your warning system work?

We all know that different sites have different ways of doing things, and depending on the genre, some sites could and would almost have to be more strict than others. So how does your warning/punishment system work? Are you a three-strikes-you're-out kind of system or is it something more complex?

On Chatting Time, we have a six-tier warning system in place. The concept is easy enough to understand, but the explanation is difficult. This is almost one of those things where you would have to sit down next to someone, maybe even do test board on a free host so that your actual accounts don't get messed up, and demonstrate from there. We chose this approach because it allows us to be more lenient with our members. Many forums do a friendly warning via PM, pointing to the rule that was broken, then go for the board warning system, and finally a ban. While this approach is good for some genres of forums, it's not good for all kinds. For example, laid back sites like general discussion communities and probably even RPG ones, you would be able to be more gentle about rule breaking. I am all for giving offenders another go at trying to straighten out and behave themselves,so this is another reason why I like this idea.

So does your site have a three strikes you're out rule,or are you more lenient to the point where members can get by with several warnings?