The policy is actually quite strict when compared to other games. On other games, maybe you get a permanent ban on first offense, but they can just buy a new account and keep playing. However here, they are given a warning, then if they ignore it and keep hacking, they are permanently banned, and they cannot join with another account.

Also, people do dumb things, and they deserve another chance. As for the racism, if he hasn't been punished for it already, if you can provide us with proof of this as well as proof of steamid, then we can punish him for this too.