Alibaba Group and a U.S. payment processor have agreed to pay a combined $600 million to settle allegations by the U.S. Department of Justice (DOJ) that they facilitated the sale and importation of illegal pharmaceuticals and other restricted products into the United States.

Under a nonprosecution agreement, Alibaba.com acknowledged it failed to prevent approximately 80,000 transactions involving prohibited items between 2016 and 2024. These transactions included illegal pharmaceuticals, pharmaceutical counterfeiting equipment, and regulated chemicals with a total gross merchandise value of about $200 million, according to the DOJ.

The DOJ stated that Alibaba’s lapses violated the Federal Food, Drug, and Cosmetics Act. Despite having policies designed to restrict certain product sales, some company employees reportedly expressed concerns over the adequacy of these safeguards. Additionally, the DOJ noted that Alibaba offered a private-messaging service that some merchants exploited to arrange illicit sales.

Alibaba did not respond to requests for comment.

The U.S. payment processor involved, AUS Merchant Services, also admitted shortcomings in its anti-money-laundering compliance and transaction-monitoring programs. The DOJ said AUS failed to prevent illegal sales and, after identifying merchants engaged in such activity, did not systematically restrict their transactions. Instead, AUS referred these merchants back to Alibaba for handling.

AUS Merchant Services is a subsidiary of Ant Group, which also declined to comment on the matter.

The settlement highlights ongoing challenges in regulating cross-border e-commerce and ensuring compliance with U.S. laws related to pharmaceuticals and controlled substances. The case reflects broader concerns about the role of e-commerce platforms and payment processors in preventing illicit trade.