c. 1500, "punishment," from Old French penalite and directly from Medieval Latin penalitatem (nominative penalitas), from Latin poenalis "pertaining to punishment" (see penal). Specifically as "the punishment laid out by law or judicial decision for a violation of the law" is by 1510s (also later for non-fulfillment or violation of an obligation or agreement). The sporting sense of "disadvantage imposed on a competitor for a breach of the rules" is by 1885; the ice hockey penalty box is attested by 1931.
c. 1300, punishen, "inflict a penalty on," from Old French puniss-, extended present-participle stem of punir "to punish," from Latin punire "punish, correct, chastise; take vengeance for; inflict a penalty on, cause pain for some offense," earlier poenire, from poena "penalty, punishment" (see penal). Colloquial meaning "to inflict heavy damage or loss" is recorded from 1801, originally in pugilism. Related: Punished; punishing.
in international diplomacy, by 1900, plural of sanction (n.) in the sense of "part or clause of a law which spells out the penalty for breaking it" (1650s).