BUSINESS

Alibaba Agrees to Settle With U.S. Over Illegal Online Drug Sales

Published: Jul. 2, 2026 6:26 p.m. GMT+8

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Before accepting the $600 million settlement, the Justice Department had accused the Chinese e-commerce giant and its U.S. payment processor of failing to prevent its platforms from being used to make illicit sales to Americans. Photo: VCG

Alibaba Group Holding Ltd. and its payment affiliate have agreed to pay a combined $600 million to resolve U.S. Justice Department allegations that they failed to prevent the export of illegal drugs and drug-making equipment to the country.

Under the non-prosecution agreement announced on Wednesday, Alibaba and its U.S. payment processor, AUS Merchant Services Inc., will pay the total sum to settle charges that they violated the Federal Food, Drug, and Cosmetic Act.

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Alibaba and AUS Merchant Services will pay $600 million to settle U.S. allegations of failing to prevent illegal drug and equipment exports.
The companies admitted inadequate compliance controls from 2016-2024, with about 80,000 illicit transactions totaling over $200 million.
Under the non-prosecution agreement, Alibaba pays $125 million fine and forfeits $200 million; AUS pays $85 million fine and forfeits $190 million; both will enhance compliance.

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Who’s Who

Alibaba Group Holding Ltd.: Alibaba Group Holding Ltd. and affiliate AUS Merchant Services Inc. agreed to pay $600 million to resolve U.S. allegations of failing to prevent illegal drug exports via Alibaba.com and AliExpress. Alibaba admitted inadequate compliance from 2016-2024, involving 80,000 transactions. Under the deal, Alibaba pays $125M fine and forfeits $200M.

AUS Merchant Services Inc.: AUS Merchant Services Inc., Alibaba's U.S. payment processor, settled U.S. Justice Department allegations of failing to prevent illegal drug exports. It admitted anti-money-laundering compliance failures between 2020-2023, paying an $85 million criminal fine and forfeiting $190 million. The company must enhance compliance and cooperate with authorities.

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What Happened When

November 2023：: Chinese President Xi Jinping and then-U.S. President Joe Biden agreed to establish a counternarcotics working group, with China pledging to restrict exports of chemicals used to produce fentanyl.

2016 to December 2024：: Alibaba failed to prevent sellers from using its platforms to import illegal products into the U.S.

January 2020 to December 2023：: AUS Merchant Services Inc. accepted credit card and wire payments from U.S. bank accounts to help merchants transfer funds overseas.

2025：: U.S. President Donald Trump imposed fentanyl-related tariffs on China, Canada and Mexico.

May 2026：: During talks in Beijing, Xi and Trump pledged to further curb the flow of fentanyl precursor chemicals into the U.S.

2026：: AUS detected merchants selling prohibited goods but failed to systematically restrict their transaction privileges.

Wednesday, July 1, 2026：: The non-prosecution agreement was announced, with Alibaba and AUS agreeing to pay $600 million to resolve U.S. Justice Department allegations.

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