Anti-Terrorism Rule to Add to Fund Fees

New reporting rules to trace possible money laundering by terrorists in mutual funds are likely to boost fund fees slightly, The Milwaukee Business Journal reports. The rules, which went into effect on June 5 and apply to transactions beginning Oct. 31 and beyond, are primarily increasing costs at transfer agents, although some fund companies might hire additional compliance staff to help scour for suspicious activity.

The new rules require funds to report to Federal authorities transactions of funds that appear to be the result of illegal activity, aimed at evading Federal law or do not make sense.

At the Johnson Family Funds, the company's transfer agent, Citigroup, has raised fees, said Colette Wallner, president of the fund company. However, she could not say by exactly how much. But what is certain is that higher fund fees are going to be passed onto investors, Wallner said. "It's not the advisors that are going to get nicked," she said. "It's the fund's owners who are going to feel that particular expense."