Money laundering is obscuring where money came from. If you walk into a bank with $3M in cash, its going to be noticed. However, if you sell a ton of $Drug for $3M cash, and own a cash-heavy / inventory-light business such as a strip-club or casino, you inject the cash into that business over time with fake transactions and treat it as ordinary income. You pay taxes on it and to everyone it looks like you are operating a particularly successful business, and you have legit cash in the bank.
In this way you've obscured that the money came from an illicit deal and made it appear legitimate. Any business that can do a lot of turnover without a lot of inventory (as someone might notice if your bar is doing a ton of business but never buying inventory) is a candidate.
For larger non-cash sums you can do things with offshore fake businesses; make a 'startup' offshore, then sell it to another offshore entity and bank the cash / declare it on your taxes. The fact that it didn't really exist is hard for on-shore regulators to notice, and now you've got a bunch of legit taxes-paid cash in your wallet.
http://www.businessinsider.com... describes some more schemes.