Alibaba Reaches $600 Million Settlement Over Illegal Sales
Chinese e-commerce company Alibaba has consented to pay $600 million and engage in a non-prosecution agreement with the Department of Justice (DOJ). This follows the company’s admission of failing to prevent thousands of illegal sales to the U.S. via its online platforms.
The DOJ announced on Wednesday that Alibaba Group Holding Ltd. and its U.S.-based payment processor, AUS Merchant Services, would pay this settlement to address claims that they did not effectively halt the sale and importation of illegal drugs, controlled substances, chemicals, and equipment for pill manufacturing through Alibaba.com and AliExpress.com.
Under the terms of the agreement, Alibaba acknowledged that between January 2016 and December 2024, about 80,000 illegal transactions involving imports into the U.S. breached the Federal Food, Drug, and Cosmetic Act and other federal regulations.
Additionally, Alibaba reported that these transactions resulted in exceeding $200 million in gross merchandise value.
Documents from the court revealed that the company didn’t adequately integrate critical wire transfer data into its transaction monitoring system. This oversight allowed some high-risk transactions to slip through the cracks. In at least one instance, after AUS investigated and reported a vendor, that vendor continued to sell restricted items to U.S. customers.
The DOJ pointed out that federal agents had conducted over 40 sting operations concerning illegal drug shipments and counterfeit pharmaceutical equipment entering the United States.
AUS Merchant Services, previously known as Alipay US, admitted to shortcomings in its anti-money laundering compliance program.
Assistant Attorney General Brett A. Shumate emphasized that businesses operating online marketplaces, regardless of their location, need to implement proper safeguards to deter misuse. “If they fail to do so, the ministry will hold them accountable,” he noted.
FOX Business has attempted to contact Alibaba for insights on this situation. In a statement shared with The Associated Press, Alibaba claimed it has reached a “mutually satisfactory resolution” with the U.S. government and would enforce stricter compliance measures for goods sold by third-party vendors on its platforms.
According to the agreement, Alibaba will pay $125 million in criminal penalties and about $200 million in forfeitures, while AUS Merchant Services will pay $85 million in criminal penalties and forfeitures totaling $190 million. The companies have also pledged to enhance their compliance programs and will keep cooperating with federal investigations.
