It's complicated.
If you use partial mode, which doesn't enforce that every function is fully typed, then it's trivial to break the type system by just using an untyped function. In order to ease conversion, we just assume the programmer knows what they are doing with untyped functions and let anything pass.
If all of your code is in strict mode, then we believe the type system to be sound. We haven't done any formal proof of this of course, and there have been plenty of bugs in the past. But that's the goal.
Some types are enforced at runtime -- just like PHP5 enforces class type annotations on parameters. However, at least for now, the runtime doesn't do a lot of the clever things with the type system that the static typechecker does. It's much more conservative with using the type information, and doesn't do things like check generics at all. (At least right now! We probably will change this in the future.) This means that we can play a little more fast and loose with the type system in the static parts; we want it to be sound, but it doesn't have to be right now; it's not going to cause a JIT crash or anything.
There are more details on the modes here: http://hacklang.org/manual/en/hack.modes.php