Alibaba Group and its U.S.-based payment processor AUS Merchant Services will pay a combined $600 million to resolve Justice Department allegations that they allowed the sale and importation of illegal pharmaceuticals and restricted items into the United States, the department said Wednesday. The settlement breaks down into $325 million from Alibaba — $200 million in forfeiture and a $125 million criminal penalty — and $275 million from AUS — $85 million in penalties and $190 million in forfeiture.
As part of a non-prosecution agreement, Alibaba admitted that it failed to prevent merchants from engaging in roughly 80,000 sales of prohibited products between 2016 and 2024, according to the DOJ. The items included illegal pharmaceuticals, pharmaceutical counterfeiting equipment and listed chemicals, with a combined gross merchandise value exceeding $200 million, the department said.
Undercover law enforcement officers purchased illegal pharmaceuticals and counterfeiting equipment on more than 40 occasions through Alibaba’s platform as part of the investigation, the DOJ said. The department alleged that Alibaba’s failure to prevent those transactions violated the Federal Food, Drug and Cosmetics Act. Although Alibaba had policies restricting the sale of prohibited items, some employees raised concerns that those protections were insufficient, the DOJ said, and the company offered a private-messaging service that some merchants used to arrange illegal sales.
AUS Merchant Services, a subsidiary of Ant Group, admitted that its anti-money-laundering compliance program and transaction monitoring system failed to detect and stop the illegal sales, the DOJ said. According to the department, after merchants had been identified as selling illegal goods, AUS did not systematically restrict their activity and instead referred them to Alibaba. The DOJ said one merchant was permitted to continue selling prohibited goods even after its activity had been reported to Alibaba. Ant Group did not immediately respond to a request for comment.
An Alibaba spokesperson described the agreement as a “mutually satisfactory resolution” in a statement Wednesday. “This settlement reflects 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 spokesperson said.
“Alibaba and AUS have documented steps taken to improve their screening and compliance and provided a commitment to ongoing cooperation with U.S. law enforcement in the future,” Assistant Attorney General Tysen Duva said. “As a result, another channel for illegal pharmaceuticals and associated equipment is now closed.”