diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 9dabafb0cde..6888a6fc25d 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -5086,10 +5086,6 @@ module ts {
             return getNarrowedTypeOfSymbol(getExportSymbolOfValueSymbolIfExported(symbol), node);
         }
 
-        function isNameScopeBoundary(n: Node): boolean {
-            return isAnyFunction(n) || n.kind === SyntaxKind.ModuleDeclaration || n.kind === SyntaxKind.SourceFile;
-        }
-
         function checkBlockScopedBindingCapturedInLoop(node: Identifier, symbol: Symbol): void {
             if (languageVersion >= ScriptTarget.ES6 || (symbol.flags & SymbolFlags.BlockScopedVariable) === 0) {
                 return;
@@ -5116,7 +5112,7 @@ module ts {
             }
 
             var current: Node = container;
-            while (current && !isNameScopeBoundary(current)) {
+            while (current && !nodeStartsNewLexicalEnvironment(current)) {
                 if (isIterationStatement(current, /*lookInLabeledStatements*/ false)) {
                     if (inFunction) {
                         grammarErrorOnFirstToken(current, Diagnostics.Code_in_the_loop_captures_block_scoped_variable_0_in_closure_This_is_natively_supported_in_ECMAScript_6_or_higher, declarationNameToString(node));
diff --git a/src/compiler/emitter.ts b/src/compiler/emitter.ts
index fbe341ccd28..1cfbbd20096 100644
--- a/src/compiler/emitter.ts
+++ b/src/compiler/emitter.ts
@@ -3832,21 +3832,20 @@ module ts {
                         return current;
                     }
                     switch (current.kind) {
+                        case SyntaxKind.SourceFile:
+                        case SyntaxKind.SwitchKeyword:
                         case SyntaxKind.CatchClause:
+                        case SyntaxKind.ModuleDeclaration:
                         case SyntaxKind.ForStatement:
                         case SyntaxKind.ForInStatement:
                         case SyntaxKind.ForOfStatement:
-                        case SyntaxKind.SwitchKeyword:
                             return current;
                         case SyntaxKind.Block:
-                            if (isAnyFunction(current.parent)) {
-                                return current.parent;
-                            }
-                            else {
+                            // function block is not considered block-scope container
+                            // see comment in binder.ts: bind(...), case for SyntaxKind.Block
+                            if (!isAnyFunction(current.parent)) {
                                 return current;
                             }
-                        case SyntaxKind.SourceFile:
-                            return current;
                     }
 
                     current = current.parent;
diff --git a/src/compiler/utilities.ts b/src/compiler/utilities.ts
index 50a8de9671d..bf8a9dd1097 100644
--- a/src/compiler/utilities.ts
+++ b/src/compiler/utilities.ts
@@ -1117,6 +1117,11 @@ module ts {
         return createTextChangeRange(createTextSpanFromBounds(oldStartN, oldEndN), /*newLength: */newEndN - oldStartN);
     }
 
+    // @internal
+    export function nodeStartsNewLexicalEnvironment(n: Node): boolean {
+        return isAnyFunction(n) || n.kind === SyntaxKind.ModuleDeclaration || n.kind === SyntaxKind.SourceFile;
+    }
+
     // @internal
     export function nodeIsSynthesized(node: Node): boolean {
         return node.pos === -1 && node.end === -1;