From The Straight Dope:
Another common approach is to mix up nonkosher funds with the assets of a front company: any above-ground business that handles a lot of cash, such as a check-cashing service, travel agency, grocery store, car wash, or coin laundry. Alternatively, you might use a business with a hard-to-value inventory â€” precious metals, jewelry, antiques, art, etc. Since law enforcement can’t be sure how much money the business is supposed to have, the fake invoices or receipts you use to conceal your swag aren’t conspicuous.
As a variation on the phony-invoicing trick, you can arrange to purchase property well below market value and slip the cash difference to the seller. You then resell a few months later at the true value, getting that cash back as a perfectly legal profit â€” any capital gains tax is just the cost of doing business. The cash you gave the original seller is his problem.
The stock market is another good place to wash money. You invest small amounts of cash in the market, several times a day, through different brokerage firms. Brokers don’t routinely talk to each other, so multiple accounts with different firms won’t attract suspicion. If you use your front company to buy the stock, there’s yet another level of complexity for the investigators to try to unwind.