Breaking News | Alibaba Pays $600M to Settle US Drug Sales Allegations

Alibaba and its US payment processor AUS Merchant Services (formerly Alipay US) entered non-prosecution agreements with the Justice Department to resolve allegations that they violated the Federal Food, Drug, and Cosmetic Act. Alibaba acknowledged responsibility for approximately 80,000 prohibited transactions from January 2016 through December 2024, with a combined gross merchandise value exceeding $200 million.

The Justice Department conducted over 40 undercover purchases of illegal pharmaceuticals and pill-counterfeiting equipment through Alibaba.com and AliExpress.com. Internal documents revealed that Alibaba employees raised concerns about inadequate compliance measures, yet the company provided private in-platform messaging that merchants used to arrange illegal transactions. AUS Merchant Services admitted that gaps in its anti-money-laundering program allowed suspicious activity from high-risk jurisdictions to go undetected.

Alibaba will pay $125 million in criminal fines and $200 million in forfeiture. AUS Merchant Services will contribute $85 million in criminal fines and $190 million in forfeiture. Both companies committed to overhauling compliance operations and maintaining ongoing cooperation with prosecutors.

• Compliance program overhaul - scope and timeline for enhanced controls on cross-border transactions

• Operational restrictions - potential changes to US-facing platform features or merchant vetting processes

• Regulatory commentary - any follow-up disclosures about impact on US market exposure or future platform liability