Grant agencies are able to enforce it (to some extent) when giving grants to R&D businesses. Through auditing and reporting.

If you're just blowing it all on holidays and fun, you're going to find it difficult to pass an audit for long. Maybe you'll have some fun for a while, but the grant tap will slow and eventually stop if you do that. Fraud charges maybe, if you push it.

You enforce the law on your citizens just like with any other citizen for any other financial crime. Usually one shows up at your door, then you go to court, etc.