Chinese technology and e-commerce giant Alibaba and its U.S. payment processor have agreed to pay $600 million to settle charges that the companies failed to prevent illegal drug sales, the U.S. Department of Justice said on Wednesday. According to a statement from the Department of Justice, the settlement was reached in the form of a "non-prosecution agreement" and involved allegations that Alibaba violated the U.S. Federal Food, Drug and Cosmetic Act by failing to prevent merchants from selling and importing illegal drugs, chemicals and counterfeit pharmaceutical equipment into the United States through its e-commerce platform.
The Justice Department said that Alibaba and its U.S. payment processor AUS Merchant Services agreed in the agreement to take responsibility for the relevant actions of their own management and employees and committed to strengthening their internal compliance systems. Alibaba said in a statement: "This settlement reflects the comprehensiveness of the regulatory process and Alibaba's full cooperation. It also reflects our commitment to continue to benchmark the highest standards in the industry in terms of controls, policies and measures, and to strictly prevent the sale of non-compliant goods."
The Justice Department disclosed that as part of the settlement, Alibaba admitted that between 2016 and 2024, it failed to prevent approximately 80,000 transactions involving chemicals, drugs, and counterfeit pharmaceutical equipment that were imported into the United States from overseas. The total value of the above-mentioned transactions exceeds US$200 million. During the investigation, law enforcement officers conducted more than 40 secret purchases of illegal drugs and counterfeit equipment to verify the existence of relevant illegal activities and the implementation of platform supervision.
In some cases, Alibaba employees raised concerns about whether illegal goods were being sold on the platform and whether the company's compliance measures adequately prevented such transactions, the Justice Department said. The U.S. government also pointed out that AUS Merchant Services’ anti-money laundering compliance system failed to prevent some merchants from using its payment services to facilitate the sale and import of prohibited goods. U.S. Assistant Attorney General Brett Shumet emphasized in a statement: "Today's settlement reflects the Department of Justice's commitment to ensuring that companies operating e-commerce and digital payment platforms must keep illegal, unapproved, substandard labeling and dangerous foreign-made drugs from their markets."
According to Reuters, this settlement agreement brings an end to relevant investigations in the United States by Alibaba and its payment institutions, but it also highlights the higher requirements that U.S. regulatory authorities have placed on e-commerce platforms and cross-border payment channels in curbing the flow of illegal drugs. From the perspective of the United States, platform companies must not only assume the role of technology and transaction matching, but also must prevent their own systems from becoming a channel for illegal drugs and related equipment to enter the U.S. market through active monitoring, strict review of merchants and products, and improvement of anti-money laundering and risk control mechanisms.