A day doesn’t go by without a new development regarding FATCA. Friday, October 10, 2014 was no exception. That day, in an article entitled, “Deutsche Bank to Aid U.S. Justice Department in Swiss Tax Evasion Probe,” The Wall Street Journal reported that Deutsche Bank was cooperating with the U.S. Justice Department to turn over the names of its U.S. accountholders with undeclared accounts. The Justice Department believes that Deutsche Bank has been complicit in helping its American clients dodge U.S. taxes.

For those who have kept an ear to the ground, this announcement came as no surprise. Indeed, ever since the Justice Department rolled out the self-reporting program last year, dozens of Swiss banks have already publicly disclosed their participation. And not to be overlooked is the fact that Deutsche Bank might just be its own worst enemy. Why? It has been waiving a red flag in front of U.S. regulators, not to mention all of the other OECD countries (Organisation for Economic Co-operation and Development), for some time now. It all started back in 2012 when the bank become the target of an international probe alleging that it rigged interest rates and manipulated currency markets.

Deutsche Bank’s U.S. operations have not fared much better. Last year, the Federal Reserve Bank of New York found that it suffered from “serious financial-reporting deficiencies.”

While this blog features Deutsche Bank, it is not the only bank that is cooperating. On the contrary, tens of thousands foreign financial institutions have already registered with the U.S. government pursuant to the FATCA law. In fact, Deutsche Bank’s announcement had barely hit one thousand tweets before two additional banks followed suit: namely, the Swiss units of global banking conglomerates Morgan Stanley and Goldman Sachs Group Inc.

What do Deutsche Bank, Morgan Stanly, and Goldman stand to gain? Immunity from prosecution at the hands of the U.S. government. And that might be the biggest perk of all, in light of the fact that the U.S. government does not “talk softly and carry a big stick” when it threatens prosecution. If there is any doubt that the U.S. government means what it says, look no further than Credit Suisse’s reaction to the threat of prosecution last May. While the bank avoided prosecution, it came at a steep price: first, it admitted to aiding U.S. tax evasion. And second, it paid a whopping $ 2.6 billion dollar settlement.

Credit Suisse is just one of many banks that have been under criminal investigation. According to The Wall Street Journal, about a dozen other Swiss banks are currently under criminal investigation for aiding U.S. tax evasion. But unlike Deutsche Bank, Morgan Stanley, and Goldman Sachs, they are not eligible for the self-reporting program.

Although the hides of all three banks might have been spared the ultimate “skinning” – namely, a criminal indictment and the negative publicity and loss of reputation that necessarily accompanies an indictment – they are not yet out of the Woods. On the contrary, each faces stiff penalties “equal to as much as half of the amount of hidden funds held for U.S. clients.”

And this is where things get interesting. Under the program, banks “can negotiate with the Justice Department for a lower financial penalty.” But there is a catch. The quid pro quo that the Justice Department demands in exchange for penalty mitigation is not an easy pill for banks to swallow: nothing less than the names (or, should I say, the “heads”) of these banks’ U.S. accountholders on a silver platter. It is here that the rhyme of the Joker from the 1989 “Batman” movie eerily starts playing in my head: “A little song, a little dance. Batman’s head on a lance.”

Uncle Sam has even gone so far as to incentivize banks to strong-arm their U.S. accountholders into waiving their rights to privacy under Swiss law – and not just those who are current accountholders, but even those with closed accounts. How so? According to the rules of engagement, for each U.S. accountholder that a participating bank can coax into “stepping out” from behind the curtain and voluntarily disclosing, the bank is entitled to subtract the amount of that account from its overall penalty.

The potential savings are nothing short of astronomical. According to The Wall Street Journal, “Some banks in the program could see hundreds of millions of dollars shaved from their total penalties …” With this much money on the line, not even an insurrection by disgruntled U.S. clients of the likes seen in the movie “Beauty and the Beast” – where a band of villagers was assembled to storm the Beast’s castle and kill him – would be enough to stop these banks from turning up the heat on those with undisclosed offshore accounts.

To say that U.S. clients are “sour grapes” about this and are unwilling to cooperate would be a gross understatement. However, if you find yourself feeling this way, it is recommended that you take some time to “cool off” before making a knee-jerk response. If not, all you might succeed in doing is making a bad situation even worse. As Brian Mahany so eloquently wrote in his blog, “Unreported Offshore Deutsche Bank Account? Keep Reading!” a client’s unwillingness to cooperate with his bank “will likely be viewed by prosecutors as an affirmative act of tax evasion.”

If you have an undisclosed offshore account and are feeling pressure from your bank – whether it be in the form of constant emails or phone calls to respond to letters – contact an experienced tax lawyer today.