When a customer running Domino enables SMTP inbound controls to use a 'Deny connections from the following SMTP internet hostnames/IP addresses' entry in the configuration document, and also has the ESMTP AUTH extension enabled, the SMTP response and console are misleading:
SMTP Server: Authentication failed for user UserName@Domain.com; connecting host 10.110.123.12
If AUTH is not in use, the error indicates the correct response, as the client IP is blocked under the configuration:
[0E78:0008-0F10] 01/01/2021 14:48:25 SMTP Server
[0E78:0008-0F10] 554 Mail from UserName@Domain.com rejected for policy reasons
In either case, the error occurs only at the MAIL FROM portion of the SMTP conversation, rather than on connection or at EHLO, but the AUTH command appears to be superseding the 'deny' entry even when authentication is not required but is enabled.
Note : This is not an error in functionality, just a misleading output.