Alibaba to pay $600m to settle illegal drug sales allegations in US probe

E-commerce giant Alibaba and its U.S.-based payment processor will pay $600 million to resolve allegations that they failed to prevent illegal drug sales. The U.S. Justice Department announced Wednesday that Alibaba and AUS Merchant Services agreed to accept responsibility for the acts of their officers and employees. They will also enhance their compliance programs as part of non-prosecution agreements.

Alibaba admitted that it failed from 2016 to 2024 to prevent about 80,000 product sales of chemicals, drugs, and pharmaceutical counterfeiting equipment imported from overseas. These transactions had a combined merchandise value of more than $200 million, according to the Justice Department. Law enforcement conducted more than 40 undercover purchases of illegal pharmaceuticals and equipment during the probe.

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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.

At times, Alibaba employees raised concerns about whether illegal products were being sold and if the company's compliance measures were adequate. The U.S. government stated that the payment processor's anti-money laundering compliance program failed to prevent some merchants from using its services to facilitate the sale and importation of banned products.

"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," Alibaba said in a statement. Assistant U.S. Attorney General Brett Shumate added, "Today’s resolution reflects the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign pharmaceuticals off their marketplaces."

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Today’s resolution reflects the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign pharmaceuticals off their marketplaces.