(CN) - Russian tycoon Gennady Timchenko and his wife Elena hit a wall in Luxembourg on Thursday, when Europe's top court backed an EU rule forcing sanctioned individuals to come clean about what they own across the bloc - a move that strengthens Brussels' grip on hidden Russian assets tied to the war in Ukraine.

The Timchenkos, Russian-Finnish nationals based in Geneva, challenged a 2022 update to the EU's sanctions rules that requires blacklisted people to declare their assets inside the bloc to national authorities. They argued the European Council had overreached, adding a new reporting obligation that never appeared in the original decision freezing their wealth.

But the Court of Justice of the European Union disagreed, ruling that the council had stayed well within its powers. The judges said the rule wasn't a new sanction at all but simply a way to guarantee the "uniform, consistent and effective application" of existing asset freezes across all member states. 

Gennady Timchenko, one of Russia's wealthiest businessmen and a close ally of President Vladimir Putin, has been on U.S. sanctions lists since 2014, after Moscow's takeover of Crimea triggered a wave of asset freezes and travel bans against Putin's inner circle. 

After Russia's invasion of Ukraine in 2022, the European Union and the United Kingdom added him and his wife to their own sanctions lists, as Western measures expanded to target hundreds of tycoons, officials and companies accused of backing or profiting from the war.

The couple's assets were subsequently frozen under the 2022 EU sanctions, which also introduced a new requirement for all listed individuals to report what assets they still held within the bloc.

The couple pushed back, arguing that the EU had overstepped, saying only national authorities, not the council, should be allowed to demand such personal financial disclosures.

But the council argued the rule wasn't a new penalty but a practical safeguard. Without it, officials would have no way to tell if sanctioned individuals were quietly moving their money around. The disclosure requirement, Brussels said, was about keeping the system transparent and enforceable across Europe.

The court agreed, finding that the EU had every right to require sanctioned people to report their assets. Even if the original decision didn't spell it out, the judges said that the council can add such measures through its regulations to ensure sanctions are applied properly.

It also stressed that member states are in charge of enforcing sanctions at home, but the EU can still set general rules to keep those efforts in sync across borders, rejecting claims that the reporting rule stepped on national powers.

The court's reasoning effectively closed the debate over scope, ensuring that Brussels can adapt enforcement rules to keep sanctions effective across the bloc.

Celia Challet, assistant professor of law at Catholic University of Lille, said the judgment cements the council's authority to create reporting obligations under the EU's foreign and security policy framework. She noted that the court went further than confirming legality, clarifying that the council's powers are not confined to bans or prohibitions but can include "positive obligations on listed persons when this is necessary to make sanctions work in practice."

Challet said the ruling also defines how power is shared between Brussels and national governments - with the council setting the framework to keep sanctions "uniform, coherent and effective across the European Union," while member states handle day-to-day enforcement through their authorities.

The ruling lands as the EU steps up its hunt for Russian wealth frozen since Moscow's full-scale invasion in February 2022. Brussels has already locked down about 210 billion ($245 billion) in central bank reserves and tens of billions more in private assets, tightening the rules to shine a light on hidden holdings and stop sanctions dodgers using shell firms or family fronts.

A council spokesperson said the institution does not comment on court rulings. The Timchenkos' legal representatives did not respond to a request for comment.

With Europe's top court siding with the council, the couple must now cover the legal costs of both the council and the European Commission. 

The decision closes the case for good, since rulings from the EU's highest court can't be challenged unless the judges themselves spot a grave procedural mistake.

Courthouse News reporter Eunseo Hong is based in the Netherlands.

Source: Courthouse News Service