Alibaba and its US payment processor will pay $600 million to settle a DOJ investigation into illegal drug sales.

Alibaba and its US digital payment processor have agreed to pay $600 million to settle a federal investigation into whether they failed to prevent the sale and importation of illegal drugs and medicines, the Justice Department said Wednesday. Alibaba entered into a non-prosecution agreement to end investigations into alleged violations of the Federal Food, Drug, and Cosmetic Act between 2016 and 2024. The investigation was led by the DOJ and the US Attorney’s Office in Rhode Island.

Alibaba has admitted that international customers used its platforms to buy nearly 80,000 products that are not authorized under US drug, device, or import laws, with a combined value of more than $200 million. The agreement did not specify the products by name, but the DOJ said it includes pharmaceuticals, controlled chemicals, and drug-making equipment. US agents have made undercover purchases of more than 40 illegal drugs and equipment.

The company admitted that “failed to prevent third-party vendors from circumventing controls and measures” on its property and using it to sell and import goods into the US in violation of federal law.” Employees at Alibaba had raised concerns internally about compliance measures and filtering systems that were not detecting illegal sales, the company admitted.

The agreement also includes AUS Merchant Services, the unit of Ant International that operates Alipay. AUS has admitted that its anti-money laundering program “failed to prevent certain Alibaba merchants from using its payment processing services to facilitate the sale and importation of prohibited products into the United States,” said the DOJ.

The deal comes at a difficult time for Alibaba in Washington. Anthropic accused Alibaba last month of using an estimated 25,000 fake accounts and nearly 29 million transactions to extract capabilities from its Claude AI model, the largest anti-dumping campaign it has exposed. Alibaba also sued the Pentagon to remove itself from the list of Chinese military companies, a name that has already prompted several firms to cut ties with the company.

Alibaba said in a statement that the fix will bring “strict compliance with the sale of products in the United States by third-party sellers on its e-commerce platforms.” The $600 million fine is among the largest the DOJ has levied against a Chinese technology company for failing to comply with the platform’s rules, and adds another regulatory hurdle facing Alibaba as it tries to maintain its US business relationships.