How does the international banking system prevent fraud in wire transfers? Specifically suppose a wire transfer from a bank in China to a bank in the United States is done. How does the bank in the United States know that that proper accounting is behind the wire transfer? Since everything is electronic what is preventing the bank in China from simply claiming there is money in the account that is sending the wire transfer?
I'm not sure I understand your question, but I'll try to answer what I think you're asking.
I think you're asking this:
"A US bank receives a wire transfer from a Chinese bank. How does the US bank ensure there's any money in fact arriving before crediting the destination account?"
Well, the way wire transfers work is that the US bank would debit the senders' account with that US bank. So the US bank in fact transfers the money between two internal accounts: debit to the Chinese bank's account with that US bank and credit the destination customer account.
If the Chinese bank doesn't have an account with the destination US bank - a third party intermediary is used that both banks have accounts with. Such third party will charge an additional fee (hence sometimes the wire transfer fees are slightly higher than you initially know when sending the money, the third party would debit from the transfer amount).
"Regular" IBAN/ACH transfers work through regulatory channels that ensure integrity and essentially use a regulatory bank as that third party. But because they're done in batches and not on-line, they're much cheaper, and the accounting is for the whole batch and not each transfer separately. But batch processing means it will take a day or two of processing, while wire transfer takes hours at most.