U.S. banks should take notice of the latest developments with the Foreign Account Tax Compliance Act, a tax-evasion law aimed primarily at foreign banks.

One of the more meaningful implications for U.S. financial institutions comes not from the 388-page guidance published last week but from a separate announcement about reciprocity with other governments.

FATCA is designed to increase tax revenue by making it harder for U.S. taxpayers to hide funds in offshore bank accounts. It will require non-U.S. banks to report any applicable funds to the Internal Revenue Service. Otherwise, U.S. banks will be required to withhold 30% of applicable funds before they are transferred to noncompliant banks.

Separately, the Treasury Department said it is working with the governments of France, Germany, Italy, Spain and the U.K. to ease the reporting requirements. The proposed approach would let banks in those countries report to their own governments on U.S. taxpayers rather than report to the IRS.

The risk for U.S. banks is that this could eventually become a two-way street.

"It really pushes the pressure that the reporting of bank deposit interest [for foreign clients] is going to have to happen now," says Dominick Dell'Imperio, a partner at PricewaterhouseCoopers LLP and co-lead of its global information reporting practice. "There's no way that the U.S. government can get other governments to say, 'Yes, we'll share the information with you,' when we keep saying we won't share it back."

If the U.S. government requires that domestic banks do the same reporting on non-U.S. clients as they do for U.S. citizens, foreign clients might pull their deposits out of the country, Dell'Imperio says. "The only way our agreements are going to work with other governments is if we have … this reporting, which for many institutions they never had to do before," he says.

If FATCA is successful, it might inspire other governments to craft similar laws, but that's not what's happening here.

"In the arrangement with foreign governments, it looks to me like it's just strengthening our position," says Christine Pratt, a senior analyst with Aite Group. That arrangement "was the only thing that I saw that might have been a little bit of a different change" that affects U.S. companies. Otherwise, the basics of the rule and its deadlines remained unchanged.

The new guidance on FATCA served primarily to clarify areas that were perceived as vague, says Tony Wicks, director of AML solutions for the vendor Nice Actimize, a unit of Nice Systems Ltd.

FATCA's purpose had some overlap with that of existing anti-money laundering requirements, and the new guidance "ties [FATCA] even more closely to existing AML, [know your customer] or onboarding processes," he says.

It also dispels the speculation that the concerns around FATCA would delay or prevent its implementation, he says. "FATCA is not going to go away."

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