Alibaba to pay $600m in US probe deal

Alibaba Group Holding has agreed to pay a total of $600 million, together with its U.S.-based payment processor AUS Merchant Services, to resolve a U.S. government investigation. The resolution is structured as non-prosecution agreements for both entities with the U.S. Department of Justice, avoiding criminal charges while imposing a substantial financial penalty.

The agreements cap a multi-year probe into how Alibaba’s platforms and payments infrastructure were used by third parties to facilitate unlawful commerce involving pharmaceuticals and related products entering the United States.

U.S. authorities alleged that Alibaba’s e-commerce platforms, including Alibaba.com and AliExpress, enabled the sale and import into the United States of illegal pharmaceuticals, controlled substances, regulated chemicals and pill-making equipment. AUS Merchant Services, which processed payments for transactions involving U.S. customers, was also implicated in the alleged misconduct.

The products at issue were not limited to finished drugs but also included chemicals and equipment that can be used in pill production, placing the matter within the scope of multiple U.S. regulatory and criminal statutes.

In its agreement with the Justice Department, Alibaba acknowledged that between January 2016 and December 2024 it failed to stop roughly 80,000 product sales involving unlawful imports into the United States. These transactions violated the Federal Food, Drug, and Cosmetic Act as well as other federal laws.

The acknowledgment underscores that the issues persisted over an eight-year period and involved a significant volume of sales, rather than isolated incidents. The failures were tied to activity on Alibaba’s major cross-border platforms serving U.S. buyers.

The settlement documents note that law enforcement personnel from multiple U.S. agencies conducted more than 40 undercover purchases of pharmaceuticals and pill-making equipment that were illegal to import into the United States. These test buys demonstrated that such products could be located, ordered and shipped via Alibaba-linked channels.

Named agencies involved in the broader enforcement effort included, among others, the Food and Drug Administration and IRS Criminal Investigation, illustrating the coordinated nature of the probe. Evidence from these operations formed a key part of the case supporting the $600 million resolution.

By entering non-prosecution agreements, Alibaba and AUS Merchant Services avoid immediate criminal charges in exchange for the $600 million payment and their acknowledgments of past compliance failures. The structure of the resolution indicates that U.S. authorities sought both financial penalties and formal commitments without pursuing an indictment at this time.

The case highlights how online marketplaces and payment processors can face significant liability when illegal products move through their systems. The scale of the admitted unlawful transactions and the size of the payment underscore the regulatory and enforcement risks tied to cross-border e-commerce and digital payments serving the U.S. market.