Alibaba, U.S. payment processor to pay $600 million in drug sales case

Alibaba Group Holding Limited and AUS Merchant Services Inc. agreed to pay $600 million after U.S. officials said the companies failed to stop illegal pharmaceuticals, controlled substances, listed chemicals and pill presses from moving through Alibaba’s online marketplaces and payment systems. The settlement, announced July 1 in Washington, D.C., puts a heavy price on compliance lapses that prosecutors said allowed prohibited products to reach U.S. consumers across Alibaba.com and AliExpress.com.

The companies entered into non-prosecution agreements with the Justice Department and agreed to accept responsibility for the conduct of officers and employees while strengthening their compliance programs. Prosecutors said the case was built on violations of the Federal Food, Drug, and Cosmetic Act and centered on a long-running failure to stop merchants from selling and importing illegal drugs and counterfeit pharmaceutical equipment into the United States.

Alibaba admitted it failed from January 2016 through December 2024 to prevent about 80,000 product sales involving chemicals, drugs and counterfeit pharmaceutical equipment imported from overseas, with federal authorities identifying gross merchandise value of more than $200 million tied to the conduct. Under the agreement, Alibaba will pay a $125 million criminal monetary penalty and forfeit $200 million. AUS Merchant Services, formerly known as Alipay US, also admitted failures in its anti-money-laundering compliance program and transaction-monitoring system. Justice Department materials said AUS is a subsidiary of Ant Group.

The agreement reaches beyond one marketplace operator and one payment processor. Alibaba.com is one of the world’s largest business-to-business online marketplaces, and AliExpress.com is a global business-to-consumer marketplace. Alibaba said Alibaba.com served more than 48 million small and medium-sized enterprises from over 190 countries and regions in fiscal 2024, showing the scale of the platform that federal authorities said was implicated in the case.

For regulators, the settlement underscores a tougher expectation for platforms that rely on third-party sellers and cross-border payments: they are being told to do more than host commerce. They must police what moves through their systems, or face criminal penalties when illegal foreign pharmaceuticals and related equipment slip through.