Would it necessarily work that way? The phrasing is "I wish there is no embezzlement in the world", which is in present tense. The wish was not to retroactively remove all instances of embezzlement in the past, present and future. In particular, I don't think it actually even implies retroactively rewriting history. I think the past would be left untouched.

The wish does imply that future cases of embezzlement should not exist in the world, but as it is not explicitly stated, a pedantic genie might choose to interpret the wish as applying only to present cases, i.e., no embezzlement exists at the time the wish is made, but embezzlement may happen in the future, even a few seconds after the wish is made.

Regardless, I think the actual joke should still hold up, because the current genie's embezzlement of 7 wishes is happening at the present time, so the wish has to erase it regardless, and bring the total to 10. And since the genie's contract with the man has already begun and did not conclude yet, even a pedantic present-only genie still has to fulfill the current contract (now 10 wishes) without being able to embezzle any wishes. But future genies (including this one) would be able to embezzle 7 wishes again for people who discover the genies later in the future, if the current genie deceptively interprets the embezzlement wish to be strictly present-only.