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TuviaDulin comments on Harry Potter and the Methods of Rationality discussion thread, part 13, chapter 81 - Less Wrong
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My guess is that rather than policing any of various muggle institutions, they investigate, as we do in our own world, whenever anyone appears to suddenly come into possession of large amounts of money for no clear reason, and if they find out they did something illegal, they throw them in jail.
Maybe people are already using wizardry to get huge amounts of money through the muggle world, but if so they may have to store and use the money very inconspicuously.
This is by far the likeliest explanation I've seen. It does lead one to wonder how many wizards are sitting on huge piles of muggle money and slowly converting it into galleons as needed.