Alibaba Group Holding Limited and its US payment processor, AUS Merchant Services, have agreed to pay $600 million to resolve a US Department of Justice investigation into breaches of the Federal Food, Drug and Cosmetic Act, in a non-prosecution agreement described by the District of Rhode Island as its largest monetary settlement to date.
Alibaba and AUS Merchant Services admitted in the 29 June agreement to failing to prevent merchants from selling more than $200 million in illegal pharmaceuticals, controlled chemicals and counterfeiting equipment across Alibaba.com and AliExpress.com between 2016 and 2024.
Alibaba will pay a $125 million criminal penalty and forfeit $200 million; AUS Merchant Services, a subsidiary of Ant Group, will pay an $85 million penalty and forfeit $190 million.
For in-house counsel at multinational platforms, the settlement sharpens the distinction between having a compliance policy and operating one. The DoJ’s findings note that Alibaba’s internal staff had already raised concerns that its controls were inadequate, while AUS Merchant Services’ anti-money laundering monitoring failed to catch flagged wire transfers and multi-payor invoices.
Justin Green of the FDA framed the case as part of a broader push to hold platforms accountable “regardless of where they operate,” a message legal teams advising cross-border marketplaces and payment intermediaries will need to weigh against their own transaction-monitoring architecture, not just their written policies.
The exposure does not end with US regulators. AliExpress remains under a separate European Commission investigation for an alleged failure to assess and mitigate the risk of illegal product sales under the Digital Services Act, with a potential fine of up to 6% of global turnover if the preliminary findings are confirmed.
That follows the Commission’s $200 million fine against Temu in May over comparable risk-assessment failures. Read together, the two actions indicate that US and EU regulators are converging on the same theory of platform liability: that marketplaces profiting from seller fees bear responsibility for what those sellers do, even when the illegal conduct migrates to encrypted channels outside the platform itself.
General counsel and compliance heads at e-commerce and payments businesses should take one practical lesson from the settlement: monitoring systems will be judged against what they were technically capable of catching, not what they were designed to catch.
Legal teams advising Alibaba, AUS Merchant Services and comparable platform clients should expect transaction-monitoring gaps and internal red-flag reports to feature more heavily in future DoJ and European Commission enforcement actions, and should treat documented internal warnings as the kind of evidence that now shapes settlement size as much as the underlying conduct itself.