Would anyone know if our US client can wire funds to a debarred party outside of the US?

Define "debarred".

The company to where the funds are going is a match within our filter list DTC list of Debarred Parties.

Can they wire money to them - sure. Does the bank want to be involved in a transaction with someone that has been convicted basically of arms smuggling or other illegal arms activity?

I'll let you be the judge of that depending on the context of the relationship between your client and the other person.

The persons (including entities and individuals) listed in documents linked below have been convicted of violating or conspiracy to violate the Arms Export Control Act (AECA). As a consequence, they are subject to “statutory debarment” pursuant to §38(g)(4) of the AECA and §127.7 of the International Traffic in Arms Regulations (ITAR). Thus, these persons are prohibited from participating directly or indirectly in the export of defense articles (including technical data) and defense services. The names of these parties and their ineligibility for defense trade have been previously published by DDTC in the Federal Register. Statutory debarment remains in effect unless the debarred person's application for reinstatement of export privileges is granted by DDTC; notice of reinstatement will be published in the Federal Register and the person's name will be removed from the list.

http://pmddtc.state.gov/compliance/debar_intro.html