Dictionary
penalization
noun
The act of punishing; punishment
synonyms
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The word "penalization" is correct and usable in written English.
You can use it to refer to an action or system of imposing a penalty or punishment, especially a fine or tax. Example: "The penalization of those who ignore traffic laws has been seen to have a positive effect on road safety."
Exact(3)
Asked about the possible penalization of Cypriot depositors, Mr. Dijsselbloem said "all elements" would be under discussion as part of a bailout package for the island that should be ready sometime in March.
Instead of seeking help, women are going underground for fear of penalization.
MR. FERRER -- This isn't a penalization of Wall Street.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com