Chinese e-commerce giant and payment unit resolve allegations over illegal pharmaceutical sales on online platforms….reports Asian Lite News Desk
Chinese e-commerce giant Alibaba Group and its US-based payment processor, AUS Merchant Services, have agreed to pay a combined $600 million to settle a US Department of Justice investigation into allegations that they failed to prevent the sale and import of illegal pharmaceuticals and related products into the United States through Alibaba’s online platforms.
The settlement was reached under separate non-prosecution agreements with the Justice Department. Alibaba will pay a $125 million criminal penalty and forfeit $200 million, while AUS Merchant Services will pay an $85 million criminal penalty and forfeit $190 million.
According to the Justice Department, Alibaba admitted that between January 2016 and December 2024 it failed to stop merchants using Alibaba.com and AliExpress from carrying out around 80,000 transactions involving pharmaceuticals, listed chemicals and pharmaceutical counterfeiting equipment that were imported into the United States in violation of US law.
Authorities said the combined value of the transactions exceeded $200 million. As part of the investigation, federal agents conducted more than 40 undercover purchases of illegal pharmaceuticals and counterfeiting equipment through the platforms.
The department said that although Alibaba maintained policies banning such products, its compliance measures were insufficient. Company employees had raised concerns internally about weaknesses in enforcement, while some merchants used Alibaba’s messaging service to facilitate unlawful sales and, in certain cases, shifted conversations to encrypted third-party messaging platforms.
Alibaba also acknowledged earning revenue from some of the merchants through membership fees, advertising, marketing services, shipping and payment-processing charges.
AUS Merchant Services admitted that between January 2020 and December 2023 its anti-money laundering compliance programme failed to prevent certain Alibaba merchants from processing payments linked to prohibited products sold to US customers.
The company said its transaction monitoring system did not fully incorporate wire-transfer data, allowing some payments from high-risk jurisdictions or involving multiple payers to go undetected. In some instances, merchants continued selling banned products even after AUS had investigated and reported them to Alibaba.
“Today’s resolution reflects the Department of Justice’s commitment to ensuring that companies operating e-commerce and digital payment platforms keep illegal, unapproved, misbranded, and dangerous foreign pharmaceuticals off their marketplaces,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division.
He stressed that online marketplace operators, regardless of where they are based, must implement effective safeguards to prevent misuse of their platforms.
Assistant Attorney General Tysen Duva of the Criminal Division said active compliance was essential to prevent criminals from exploiting e-commerce platforms.
He added that Alibaba and AUS had taken documented steps to strengthen their compliance and screening systems and had committed to continued cooperation with US law enforcement.
Under the agreements, both companies accepted responsibility for the conduct of their officers, employees and agents, and agreed to enhance compliance procedures, improve transaction monitoring and assist US authorities in ongoing and future investigations.
Founded in 1999, Alibaba operates the global business-to-business marketplace Alibaba.com and consumer shopping platform AliExpress. The company is listed on both the New York Stock Exchange and the Hong Kong Stock Exchange.
