The Konoha Strict Correctional Facility (木ノ葉厳重警戒施設, Konoha Genjū Keikai Shisetsu), which only appeared in the anime, is a place where shinobi who have committed serious crimes work off their debt to society. In the past, this place used to be called the Special Ninja Felony Prison (特別戒施設, Tokubetsu Keikai Shisetsu). However, due to reduced crime rate, the prison was rebuilt into a smaller facility and renamed. The prison is a shiro built in the center of a volcanic area on a triangular island (akin to a kunai shape), with a long Bascule bridge to connect to the watch-house and the castle. There is a large, exercise area on the front of the island, where prisoners are to dig through the soils as character building.
The prison houses murderers and missing-nin who have broken the law. Known inmates of this facility are Mizuki, Fūjin and Raijin. Mizuki manipulated the two brothers to help him break out, leading to a huge riot where all the prisoners escaped after taking the guards as hostages. However, all the prisoners were recaptured shortly (Fūjin and Raijin were duped into returning by Tsunade).
Fūjin and Raijin were actually too powerful in terms of physical strength to be contained in the prison, as they can easily bend the bars and overpower the guards. It is the jailers' control over the food supplies that keeps the two prisoners in check.