HEC Research Papers Series,
HEC Paris

Abstract: This article analyses the international legal framework governing financial sanctions, with particular emphasis on the distinction between current and capital account transactions. It examines how cross-border financial flows affected by sanctions are regulated under three principal regimes: the IMF Articles of Agreement, WTO law, and international investment agreements. The analysis shows that these frameworks provide differing and partly overlapping forms of legal coverage, resulting in an uneven and segmented regulatory landscape. While restrictions on payments and transfers relating to current transactions are generally subject to more developed legal disciplines, capital movements are regulated in a more limited and differentiated manner across the regimes. The article further considers how the classification of a measure as affecting current or capital transactions influences its legal treatment and the extent of applicable obligations. It argues that this classification is central to understanding the legal reach of financial sanctions. In addition, it reviews the role of security exceptions, which are present across all three frameworks and significantly affect the degree to which financial sanctions are subject to international scrutiny and review.

Keywords: IMF; WTO; International Investment Agreements; Capital Account; Current Account; International Financial Law; Financial Sanctions

JEL-codes: F32; F33; F51

21 pages, July 16, 2026

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