Restrict prisoner to penalty (7)
I believe the answer is:
confine
'restrict' is the definition.
(I know that restrict can be written as confine)
'prisoner to penalty' is the wordplay.
'prisoner' becomes 'con' (abbreviation for 'convict').
'to penalty' becomes 'fine' (a financial penalty).
'con'+'fine'='CONFINE'
(Other definitions for confine that I've seen before include "Incarcerate" , "Restrict (to an area)" , "Shut in" , "Imprison" , "pen" .)