WASHINGTON — Alibaba Group Holding and its U.S.-based payment processor, AUS Merchant Services, have agreed to pay a combined $600 million to resolve a U.S. Department of Justice investigation into allegations they failed to prevent the sale and import of illegal pharmaceuticals, controlled substances and related products through Alibaba's online marketplaces, U.S. authorities said.
The Justice Department announced on July 1 that the companies entered into non-prosecution agreements, under which they accepted responsibility for the conduct described by prosecutors and committed to strengthening compliance programs designed to detect and prevent unlawful transactions.
According to the department, the investigation found that between 2016 and 2024, merchants using Alibaba's e-commerce platforms completed roughly 80,000 transactions involving illegal pharmaceuticals, regulated chemicals, pill presses and other prohibited products destined for the United States. Authorities said the transactions represented more than $200 million in gross merchandise value. The investigation included more than 40 undercover purchases conducted by federal agents.
The Justice Department said Alibaba and AUS Merchant Services admitted that their compliance systems failed to prevent merchants from using the platforms and payment services to facilitate unlawful sales in violation of the U.S. Federal Food, Drug, and Cosmetic Act. Prosecutors also said the companies agreed to enhance internal controls, improve monitoring of high-risk transactions and continue cooperating with U.S. authorities.
Under the settlement, Alibaba will forfeit $200 million and pay a criminal penalty of $125 million, while AUS Merchant Services will forfeit $190 million and pay an $85 million criminal penalty, according to the Justice Department.
In a statement, Alibaba said the agreement reflected "a thorough regulatory process with Alibaba's full cooperation and our commitment to best-in-class standards of control, policies, and measures against non-compliant product sales." The company said it was committed to strengthening safeguards governing third-party merchants selling products into the United States.
Federal authorities said the investigation involved multiple agencies, including the Food and Drug Administration's Office of Criminal Investigations, the Internal Revenue Service's Criminal Investigation division and other law enforcement partners. Prosecutors said the case underscored the government's focus on holding e-commerce platforms and payment processors accountable when compliance failures allow illegal products to reach U.S. consumers.
The non-prosecution agreements resolve the criminal investigation without charges being filed, provided the companies comply with the terms of the agreements and implement the required compliance measures, according to the Justice Department.
