External forwarding from Office 365 Exchange mailbox stops working

Issue

Emails forwarded to external addresses from MS Office 365 Exchange mailboxes no longer get forwarded. Instead, the following bounce message goes back to users' mailbox:

Delivery has failed to these recipients or groups:
Name (email)
Your message wasn't delivered because the recipient's email provider rejected it.
Diagnostic information for administrators:
Remote Server returned '550 5.7.520 Access denied, Your organization does not allow external forwarding. Please contact your administrator for further assistance. AS(7555)'

Resolution

The issue occurred due to a recent (October 2020) change in Office 365 outbound spam filtering default policy behaviour. By default, email forwarding to external recipients is no longer allowed for security reasons.

To allow external forwarding for the whole organisation:

  • Login to Office 365 admin center
  • Navigate to Admin centers > Security > Threat management > Policy > Anti-spam
  • Edit Outbound spam filter policy and set Automatic forwarding to On - Forwarding is enabled
    Office 365 - Outbound spam filter policy

To allow external forwarding for specific users:

  • Login to Office 365 admin center
  • Navigate to Admin centers > Security > Threat management > Policy > Anti-spam
  • Click Create an outbound policy
    • Set Automatic forwarding to On - Forwarding is enabled
    • Add Applied if... condition: sender is and add relevant users.
      Office 365 - Outbound Policy

October 2020
Microsoft Office 365
Microsoft Exchange Online

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