Why do US banks require the full legal name of foreign beneficiaries for international wires?

This is needed to run the name (and its associated information) against the various sanctions screening lists that, by law, they have to do. One example is the Specially Designated Nationals list (or SDN) published by the OFAC (Office of Foreign Assets Control).

There may be other lists that the financial institution would be screening the name against. A partial name like “John,” “Peter,” “Lee,” “Patel,” “Khan,” “Kim,” “Sara,” etc., is too broad a match to be able to screen the name accurately.