The Booth Steamship Company ordered Anselm for its passenger and cargo liner services between Liverpool and Brazil.

[9] On 21 July 1940 she left Liverpool carrying 82 child evacuees to Halifax, Nova Scotia for the Children's Overseas Reception Board.

On her return voyage Anselm joined Convoy SL 74, which left Freetown on 10 May and reached Liverpool on 4 June.

[18] Sources agree that she was escorted by the survey vessel HMS Challenger and Flower-class corvettes Lavender, Petunia and Starwort.

[4] In the early hours of 5 July 1941 Anselm and her escorts were in mid-Atlantic, proceeding south through fog about 300 nautical miles (560 km) north of the Azores.

However, a Luftwaffe Focke-Wulf Fw 200 Condor patrol had reported the convoy's position[19] and at 0426 hours the German Type VIIC submarine U-96, commanded by Kptlt Heinrich Lehmann-Willenbrock, fired a spread of four torpedoes at Challenger and Anselm.

[4] None hit Challenger but one struck Anselm's port side amidships, causing extensive damage and momentarily lifting the troop ship in the water.

[15] Challenger had been 1⁄2 nautical mile (930 m) ahead but manoeuvred close to Anselm's port quarter and took off 60[15] or more[4] survivors as the troop ship's bow settled in the water.

[20] One officer who stayed aboard to the end was an Air Force chaplain lately of RAF Bridgnorth, Squadron Leader Cecil Pugh, who "seemed to be everywhere at once, doing his best to comfort the injured, helping with the boats and rafts... and visiting the different lower sections where men were quartered.

One leading aircraftman, Wilfrid Marten, recalled being in the sea for a few hours and being "near death's door" before he was rescued by a lifeboat.

This left Challenger and the corvettes badly overloaded, so the survivors were transferred again to HMS Cathay which landed them at Freetown.

[4] The escorts may have missed one lifeboat, as one survivor reports that after the sinking he spent 18 days in a boat with neither food nor water.