penal colony

n. location where convicts are sent to serve out their sentence (e.g. Australia or the state of Georgia, U.S.A. when they were under the British Empire)

A penal colony is a colony used to detain prisoners and generally use them for penal labor in an economically underdeveloped part of the state's (usually colonial) territories, and on a far larger scale than a prison farm. The most well known was Devil's Island in French Guiana. The British Empire used its colonies in North America for almost 150 years and then parts of Australia for a further 75 years.
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Noun
1. a penal institution where prisoners are exiled (often located on an island from which escape is difficult or impossible)
(hypernym) penal institution, penal facility

Synonyms and related words:
POW camp, bastille, black hole, borstal, borstal institution, bridewell, brig, cell, concentration camp, condemned cell, death cell, death house, death row, detention camp, federal prison, forced-labor camp, gaol, guardhouse, house of correction, house of detention, industrial school, internment camp, jail, jailhouse, keep, labor camp, lockup, maximum-security prison, minimum-security prison, oubliette, pen, penal institution, penal settlement, penitentiary, prison, prison camp, prisonhouse, reform school, reformatory, sponging house, state prison, stockade, the hole, tollbooth, training school