Washington, July 2: Chinese e-commerce giant Alibaba Group, along with its payment processor AUS Merchant Services, has agreed to pay $600 million to the U.S. Department of Justice under separate non-prosecution agreements. This settlement addresses allegations that they failed to prevent the sale and importation of illegal drugs and related products through Alibaba’s online marketplace in the United States.
The agreement includes a $125 million criminal fine from Alibaba and a $190 million forfeiture, while AUS Merchant Services will pay an $85 million criminal fine and also face a $190 million forfeiture. In total, these payments amount to $600 million.
According to the Justice Department, Alibaba admitted that between January 2016 and December 2024, it did not adequately prevent merchants using Alibaba.com and AliExpress from importing drugs, listed chemicals, and counterfeit drug manufacturing equipment in violation of U.S. laws.
The department reported that the total gross trade value of these transactions exceeded $200 million. During the investigation, federal agents conducted over 40 undercover purchases of drugs and counterfeit goods that were illegal to import into the United States.
Despite having policies to restrict such products, the department noted that Alibaba employees expressed concerns that the controls to ensure compliance were insufficient. Some merchants used Alibaba’s internal messaging service to facilitate illegal transactions, and in certain cases, directed buyers to encrypted third-party messaging platforms.
The company acknowledged that it profited from membership, advertising, marketing, shipping, and payment-processing fees from some merchants.
AUS Merchant Services admitted that between January 2020 and December 2023, its anti-money laundering compliance program failed to prevent certain Alibaba merchants from using its payment processing services to sell restricted products to U.S. buyers.
The company recognized that its transaction monitoring system failed to adequately include certain wire transfer data, meaning that payments linked to higher-risk areas or multiple payers were not properly identified. In some instances, merchants continued to sell restricted products even after AUS conducted investigations and reported to Alibaba.
Brett A. Shumate, Assistant Attorney General for the Justice Department’s Civil Division, stated, “Today’s decision underscores the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign drugs off their marketplaces.”
Tyson Dua, Assistant Attorney General for the Criminal Division, added, “When compliance is not properly enforced, criminals exploit e-commerce sites to engage in illegal activities and profit from them.”
He further noted that Alibaba and AUS have detailed the steps they have taken to improve their screening and compliance processes, promising ongoing cooperation with U.S. law enforcement agencies in the future. As a result, another avenue for illegal drugs and related equipment has been closed.
Under the agreements, both companies accepted responsibility for the actions of their officers, directors, employees, and agents. They also agreed to strengthen compliance arrangements, enhance transaction monitoring, and continue cooperating with U.S. authorities in ongoing or future investigations.
Founded in 1999 in China, Alibaba operates Alibaba.com, one of the world’s largest business-to-business online marketplaces, and AliExpress, a global consumer shopping platform. The company is listed on both the New York Stock Exchange and the Hong Kong Stock Exchange.
Leave a Comment