The governing International Automobile Federation (FIA) said in a statement that the Spaniard's car was found to have a damaged wheel tether in pre-event scrutineering.
"The team refused to follow the instructions of the scrutineers," it added.
"Therefore the technical delegate checked the damaged tether himself and found that the tether was not only damaged but also several cut fibres were knotted together."
The FIA said the Red Bull-owned team had been aware of the damaged tether and presented the car in an unsafe condition.
Sainz has scored 29 of the sixth-placed team's 33 points so far this season.
(Reporting by Alan Baldwin, editing by Pritha Sarkar)
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