Oppenheimer Holdings Inc. will pay $1.4 million to settle a brokerage industry regulator’s claims that it had an inadequate anti-money laundering program and failed to detect and report suspicious penny stock transactions.

The company’s brokerage unit failed to identify as “red flags” sales of more than 1 billion shares of 20 low-priced, highly speculative unregistered securities from August 2008 to September 2010, the Financial Industry Regulatory Authority said in a statement today. The firm also failed to conduct adequate due diligence on a correspondent account of a broker in the Bahamas, Finra said.

“Broker-dealers are required by federal securities laws and Finra rules to monitor customers’ accounts so that those accounts are not used for illegal activities, such as money laundering and penny-stock schemes that can cause considerable harm to investors,” Brad Bennett, enforcement chief for Washington-based Finra, said in a statement.

Oppenheimer said in an e-mailed statement that it has significantly tightened its policies relating to the sales of low-priced shares and enhanced its review of clients’ sales with respect to anti-money laundering oversight. The firm agreed to settle without admitting or denying wrongdoing, Finra said.