PAGCOR Probity Checking Framework: Requirements, Levels, and Who Gets Screened

The PAGCOR Probity Checking Framework is PAGCOR's risk-based system for verifying the identity, integrity, competence, financial capacity, and criminal and personal background of the individuals and entities it regulates. It applies to new applications, renewals, and intervening events such as changes in board composition, corporate officers, shareholdings, or beneficial ownership, as well as adverse reports or suspected wrongdoing. Applicants are classified into three levels — Minimum, Intermediate, and Enhanced — based on a risk assessment. The Appropriate Licensing Department (ALD) has full discretion over the final risk determination, and the Investigation and Verification Department (IVD) conducts Level 1 checks internally while accredited probity checkers handle Level 2 and 3 assessments.

Who must undergo a probity check

The framework governs probity checks on both corporate entities and their key officers. It covers individuals who apply for, currently hold, or are otherwise associated with PAGCOR licenses and regulatory approvals — including beneficial owners, directors, corporate officers, and shareholders with significant interests.

A beneficial owner is any natural person who has ultimate effective control over a juridical person or legal arrangement, or who owns at least twenty percent (20%) of its shares, contributions, or equity interest.

Corporate officers generally refer to individuals formally elected by the board of directors under Section 24 of Republic Act No. 11232, the Revised Corporation Code of the Philippines — the President, Treasurer, Secretary, and other officers provided in the bylaws. Corporations vested with public interest must also elect a Compliance Officer. Other key officers with significant authority — such as the COO, CFO, or heads of Legal, Internal Audit, IT, AML Compliance, or Gaming Operations — may be subject to probity checks at the discretion of the licensing departments.

When probity checks are required

Under Section 3 of the framework, probity checks are conducted in these instances:

• Application for a license, authorization, or accreditation
• Renewal of a license, authorization, or accreditation
• Occurrence of intervening events, including changes in board composition, changes in corporate officers, and changes in control, legal ownership, or beneficial ownership
• Receipt of adverse reports or reasonable suspicion of wrongdoing or non-compliance
• Annual periodic review covering the board of directors, corporate officers, shareholders holding at least 20% ownership or significant controlling interest, and beneficial owners

Mandatory notification. All PAGCOR-licensed, -authorized, and -accredited entities must formally notify PAGCOR in writing within fifteen (15) calendar days from the effective date of changes in board composition, corporate officers, control, legal or beneficial ownership, and other analogous changes.

What the checks cover

The framework's areas of probity check apply to both corporate and individual applicants. These include identity verification using government-issued IDs, corporate registration documents, and biometric data where applicable; address verification, including on-site inspections where necessary; professional license and education background checks; pending court cases, court judgments, and litigation checks; and criminal background checks in local or international jurisdictions.

They also cover insolvency or bankruptcy checks, credit background checks, financial stability evaluation, relevant national and international media checks, regulatory compliance review, AML/CTPF screening against watchlists such as the AMLC, UN, and OFAC, and fraud detection.

The three levels of probity check

The ALD classifies applicants into one of three risk categories based on business size and scale, complexity and transparency of beneficial ownership, geographic exposure, financial standing and stability, and compliance history.

Level 1 – Minimum applies to low-risk applicants such as small-scale, local ownership with clean records and transparent operations. It covers identity and address verification, local court and litigation checks, local criminal background checks, media review, and AML/terrorist database screening.

Level 2 – Intermediate applies to medium-risk applicants such as mid-sized operations with partial foreign ownership or moderate complexity. It includes all Level 1 checks plus bankruptcy/insolvency and credit background checks.

Level 3 – Enhanced applies to high-risk applicants such as large-scale operations with foreign or institutional shareholders, complex structures, or prior adverse findings. It includes all Level 1 and 2 checks plus comprehensive financial stability review, detailed regulatory compliance analysis, full fraud investigation, international criminal and civil records review, and verification of licenses and education for corporate officers.

As a general rule, a Level 1 probity check applies to individuals involved in intervening events, subject to the ALD's risk assessment. The ALD may assign a different level if additional risk indicators warrant heightened scrutiny.

How the process runs

Level 1 checks are conducted internally by the IVD at minimum cost to the applicant. Level 2 and 3 checks are performed by accredited third-party probity checkers, with costs borne by the applicant. The IVD assigns applicants to accredited checkers using a simple rotation or round-robin system and maintains a central database of individuals who have undergone probity assessment.

The IVD must notify the ALD in writing within three (3) working days from receipt of complete documents whether the check will be done internally or by an assigned accredited checker. All probity checks must be completed within thirty (30) calendar days from receipt of complete documentation. If this is not feasible, the IVD or the accredited checker must notify the ALD in writing with the reason and an updated timeline. Final results are transmitted to the ALD within five (5) working days from receipt of the completed report.

Failure to comply, and appeals

Failure to submit required documents, provide accurate information, or fully cooperate within the stipulated timelines may result in rejection or withdrawal of the application, suspension or revocation of an existing license, authorization, or accreditation, and legal action in the event of fraud. These constitute grounds for a negative probity check finding, subject to the ALD's assessment and, where applicable, Board approval.

Applicants dissatisfied with the outcome may file a written request for reconsideration with the ALD within fifteen (15) calendar days from receiving the results. A final decision is issued within fifteen (15) working days of the request, unless an extension is justified.

A favorable probity check is necessary but does not guarantee approval. All applications remain subject to compliance with other regulatory requirements, comprehensive evaluation by the ALD, and final approval by the PAGCOR Board of Directors.

Frequently asked questions

Who needs to undergo a PAGCOR probity check? Corporate applicants and their key officers, beneficial owners, directors, corporate officers, and shareholders with significant interests — as well as individuals who currently hold or are associated with PAGCOR licenses and regulatory approvals.

How long does a PAGCOR probity check take? All probity checks must be completed within thirty (30) calendar days from receipt of complete documentation, whether conducted by the IVD or an accredited probity checker.

What happens if an entity fails to comply with probity check requirements? The application may be rejected or considered withdrawn, an existing license may be suspended or revoked, and legal action may be commenced in cases of fraud.

Practical takeaways

• Probity checks apply not only to new applicants but also to renewals, intervening events, adverse reports, and annual periodic reviews.
• Entities must notify PAGCOR in writing within fifteen (15) calendar days of changes in board composition, corporate officers, or ownership.
• Level 1 checks are handled internally by the IVD; Level 2 and 3 checks are performed by accredited third-party checkers at the applicant's cost.
• The ALD has full discretion over the final risk classification and may raise the probity check level beyond the initial recommendation.
• A favorable probity check does not guarantee license approval — Board approval and other regulatory requirements still apply.

Primary sources

The rules discussed above are drawn from the following PAGCOR issuances, embedded here in full for your reference.

Probity Checking FrameworkOpen in Law LibraryDownload PDF

Memorandum on Implementation of Probity Checking FrameworkOpen in Law LibraryDownload PDF

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.