Crime doesn’t pay – arresting developments in financial foul play

ESG in practice

Published: 1 July 2024

Financial crime can go under the radar in shipping, with money laundering and illegal funding posing real risk to reputation, industry and society as a whole. Skuld's Daria Avdeeva, Vice President Legal and Sean Smith, Global Head of Underwriting Processes, strive to ensure that all Skuld employees are on the lookout for suspicious activity.

The Skuld team has somewhat of a balancing act on its hands, with the legal team wanting to implant and raise awareness of the risk of financial crime, while Underwriting Management is focused on a reasonable approach without setting off alarm bells with every client call.

"We need to be the industry lead when it comes to assessing risk, pushing awareness of the threat of financial crime to the forefront of the business agenda," Daria says. "But at the same time, we shouldn't be looking for something that isn't there".

"It's a case of vigilance, not over-vigilance.", adds Sean.

Cultural commitment

Skuld, together with many other financial institutions, faces a transition in an industry that is coming to terms with an environment of ever-growing financial crime risk, sophistication and severe consequences for failing to get its governance right.

"To protect the reputation of Skuld and its assureds, while demonstrating our commitment to ESG excellence, we need a robust foundation in place, with a strong culture of awareness," says Daria.

"This is a crucial area – there's a great deal at stake here... for everyone, with underwriting teams at the forefront."- stresses Sean.

ESG through and through

Financial crime comes in many forms, but in Skuld's case, our concern centres on who the potential partners/assureds are and what forms of activity they undertake.

The ramifications of exposure to illegal activity or funds can be a challenge for both our business reputation and society itself, for example, ill-gotten gains being 'cleaned' through the insurance sector, or terrorism groups receiving crucial links to finance.

It is, as Daria and Sean make clear, a vital ESG issue.

"This is an area of interest that touches upon each letter in ESG, which I don't think is always fully appreciated – says Daria."

"There are hundreds of billions of dollars flowing through criminal networks each year, with money being generated via activity such as illegal logging, illegal wildlife trade, human trafficking, forced labour and drugs, where there are obvious links to the E (environment) and the S (social) elements.

"Criminals need to launder money to utilise it and cover their tracks, and this is where the G (governance) element comes into play".

Building trust

Good governance can be used to block illegal financial flows and mitigate business and reputational risk, says Sean.

The framework implemented in Skuld ensures that we are playing our part.

In practice, the work involves a high level of responsibility for our annual company-wide AML risk assessment, all related internal frameworks and systems, reporting to authorities on AML/CTF related issues, and Skuld's customer risk scoring model. On a more operational side, there are risk assessments, and potential red flags raised both through our AML system and by others. AML training and assistance to the underwriting teams worldwide is also part of the AML focus in Skuld.

The AML systems are "fundamentally important" to identifying suspicious activity, Daria says, but so are the interaction and open communication throughout the global business teams.

"The one-to-one chats and discussions where we look at risk across diverse segments – for example the yachts and energy businesses are very different – and work to understand individual challenges are also critical," Sean says.

"The more we raise awareness and competence, the more we can combat this issue, consolidating our position as a trusted partner. That is, of course, essential for Skuld – adds Daria."

Safe hands

The word 'awareness' comes up time and time again during conversation and for good reason.

As law-abiding citizens, we need to wake up to the fact that financial crime is ingrained in the modern world. That's why, from a business perspective, Skuld's ongoing assured due diligence processes and annual AML assessments are essential: "So we get to know the customer and the risk involved with their business as well as we possibly can, therefore making the most informed decisions."

Awareness within Skuld is now "high" Sean confirms, "and that includes at board level, throughout Executive Management, and across all the business units.

"We have a very solid framework that ensures employees have clear instructions on what to do and what to look for when aiming to get the most accurate risk picture of an assured." – he continues.

The cooperation between the teams, like Legal and Underwriting is crucial to make sound business decisions. Skuld's global teams now reject business "regularly" (for AML and a host of other reasons) to maintain the highest standards and ensure reputational integrity.

"Of course, it's better to be safe than sorry. In that regard, that's also why we adhere to Norwegian AML regulations across the whole company – as well as specific jurisdictional regulations, such as those in the UK - as they tend to be the most stringent. A standardised, high-quality approach helps simplify a complex landscape here". – says Daria

Thinking beyond the box

Stepping away from the regulations for a moment, frameworks, processes and procedures, Daria sums up the complexity with a straightforward statement that encapsulates Skuld's approach:

"I think at the end of the day it's important to be an honest player," she stresses. "Due diligence, risk assessment and compliance aren't just box ticking exercises, they are part of how we serve our assured's, our industry and society as a whole. These are the tools we use to ensure robust governance and high standards."

Reputational damage, Sean adds, is also essential to guard against, especially for a business like Skuld, which has spent more than 126 years building its brand as a trusted industry partner.

"Being associated with, for example, AML, bribery and corruption cases can have devasting effects on reputation," he says. And, compared to legal fines or other penalties, the impact can be "never ending".


It is therefore important that anti financial crime is not an "add-on" task, but something that is absolutely intrinsic to Skuld's ESG ambitions.

"I think everyone at Skuld understands that. Certainly, our colleagues are 100% committed to helping fight the threat of financial crime in shipping for a fairer, safer, more sustainable industry future, and we see the focus on it is only growing." – sum up Daria and Sean.

Which, at the end of the day, sounds like a very balanced approach.