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Emailing vSZ guest passes fails

New Contributor II

We've moved from an on-prem Exchange server to O365, I've changed the System >> General Settings >> SMTP Server to the appropriate O365 SMTP server host as per option 2 of;

Alerts are being sent after the changes e.g. AP's down etc. but emailing of guest passes fails. The only error I can find is in Events & Alarms >> Events:
Code | Type | Severity | Activity
982 | Email sent failed  | Warning | [IDM] sent email to [] failed.
The guest passes are only sent to internal organization users.
We are on Controller version:
What am I missing? Is there another place to setup SMTP server?