You have an Exchange Online mailbox or distribution list and you try to enable email forwarding to an external recipient. After a message is forwarded you receive a Non Delivery Receipt (NDR) with following error message:
‘550 5.7.520 Access denied, Your organization does not allow external forwarding. Please contact your administrator for further assistance. AS(7555)’.
In Microsoft 365 default anti-spam policies, the anti-spam outbound policy (Default) policy must be edited to turn “automatic forwarding” setting to On – Forwardin is enabled. Alternatively you can create another policy in which automatic forwarding will be enabled for all users and keep the default policy with automatic forwarding disabled for specific users or groups.