IMF head Christine Lagarde says she has been placed under formal investigation for negligence in French fraud case but has not been charged.
She has been questioned several times about her role in a 400m euro (£318m; $527m) compensation payout to businessman Bernard Tapie in 2008.
Ms Lagarde was finance minister in President Nicolas Sarkozy's government at the time of the award.
Mr Tapie supported Mr Sarkozy in the 2007 presidential election.
His case was later referred by Ms Lagarde to a three-member arbitration panel which awarded the compensation.
Investigators suspect he was granted a deal in return for his support of President Sarkozy.
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