Alibaba, US Payment Partner Agree to Pay $600 Million to Settle Illegal Pharmaceutical Sales Probe

Washington, July 2026 : Chinese e-commerce giant Alibaba Group and its US-based payment processor, AUS Merchant Services, have agreed to pay a combined $600 million under separate non-prosecution agreements with the US Department of Justice (DOJ) to resolve allegations that their platforms failed to prevent the sale and import of illegal pharmaceuticals, restricted chemicals and counterfeit drug-making equipment into the United States.

The settlement marks one of the largest enforcement actions involving an international e-commerce marketplace and highlights growing scrutiny of online platforms over the sale of products that violate US import and public health laws.

Under the agreements, Alibaba will pay a total of $325 million, comprising a $125 million criminal penalty and $200 million in forfeiture. AUS Merchant Services will pay $275 million, including an $85 million criminal penalty and $190 million in forfeiture, taking the combined settlement amount to $600 million.

According to the Justice Department, Alibaba acknowledged that between January 2016 and December 2024, merchants operating on its online marketplaces, Alibaba.com and AliExpress, completed nearly 80,000 transactions involving pharmaceuticals, listed chemicals and pharmaceutical counterfeiting equipment that were illegally imported into the United States.

Federal authorities estimated that the total gross merchandise value of these transactions exceeded $200 million.

As part of the investigation, undercover federal agents conducted more than 40 controlled purchases of pharmaceuticals and equipment that were prohibited from being imported into the US. Investigators said the purchases demonstrated that sellers were able to use Alibaba’s platforms to market and ship products that violated American regulations.

The Justice Department noted that although Alibaba maintained internal policies prohibiting the sale of such products, compliance mechanisms were insufficient to prevent violations. Company employees had reportedly raised concerns over the effectiveness of the platform’s monitoring systems, but those shortcomings persisted for years.

Investigators also found that some merchants used Alibaba’s internal messaging system to negotiate and facilitate unlawful transactions. In several instances, sellers allegedly encouraged buyers to continue discussions on encrypted third-party messaging applications to avoid scrutiny.

The company further admitted that it generated revenue from some of these merchants through membership subscriptions, advertising, marketing services, shipping arrangements and payment-processing fees linked to their business activities.

Meanwhile, AUS Merchant Services admitted that deficiencies in its anti-money laundering (AML) compliance programme between January 2020 and December 2023 enabled certain Alibaba merchants to process payments for prohibited products sold to customers in the United States.

The company acknowledged that its transaction-monitoring system failed to incorporate critical wire-transfer information, limiting its ability to identify suspicious payments originating from high-risk jurisdictions or involving multiple payers. Authorities also found that some merchants continued selling restricted products even after AUS had investigated their activities and reported concerns to Alibaba.

Commenting on the settlement, Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said the agreements underscore the government’s commitment to ensuring that digital marketplaces prevent the sale of illegal, unapproved, misbranded and potentially dangerous pharmaceutical products.

He stressed that companies operating online marketplaces—whether based in the United States or overseas—must implement effective safeguards to stop criminal actors from exploiting their platforms. Failure to do so, he said, would result in legal accountability.

Assistant Attorney General Tysen Duva of the Criminal Division said robust compliance systems are essential to preventing criminal organisations from using e-commerce platforms to profit from illicit trade.

He added that both Alibaba and AUS Merchant Services had taken documented steps to strengthen their screening processes and compliance programmes and had committed to continued cooperation with US law enforcement agencies.

As part of the agreements, both companies accepted responsibility for the conduct of their officers, directors, employees and agents. They also agreed to enhance transaction monitoring, strengthen internal compliance controls and cooperate fully with any ongoing or future investigations involving illegal sales conducted through their platforms.

Founded in 1999, Alibaba operates Alibaba.com, one of the world’s largest business-to-business online marketplaces, and AliExpress, a global consumer shopping platform serving millions of buyers worldwide. The company is publicly listed on both the New York Stock Exchange and the Hong Kong Stock Exchange and remains one of the world’s largest e-commerce enterprises.