When a fault is detected, a signal is beamed to your friendly local Department of Motor Vehicles office, alerting them that you are now in violation of the Federal Clean Air Act. Unless you rectify the problem, and pronto, expect a summons in the mail. But the system doesn't stop there. OBD3 is integrated into the vehicles various computer systems, meaning that it has access to every piece of data flowing through your car. Vehicle speed for example.
Some cars even have sensors in the seat to detect the number of occupants.
This is all supposition, but let's say that a bored police officer punches in your number, and determines via GPS that you are in a 45mph zone. He then queries your OBD3 system to learn that you are traveling at 58 miles per hour. It's a simple matter to signal the engine management computer to gradual slow to a halt, whereby the officer can drop by and issue you a ticket at his leisure. Of the 255 data addresses available to OBD3, only 6 have been allocated. It was a simple enough idea.