"The SMTP address has no mailbox associated with it" error occurs in Dynamics 365

The following is an example of the Failure Details that will appear:


*****************************
Request to Exchange::
*****************************
<Trace Tag="EwsRequestHttpHeaders" Tid="534" Time="2016-12-19 19:00:22Z">
POST /EWS/Exchange.asmx HTTP/1.1
Content-Type: text/xml; charset=utf-8
Accept: text/xml
User-Agent: ExchangeServicesClient/15.00.1076.004
Accept-Encoding: gzip,deflate


</Trace>
<Trace Tag="EwsRequest" Tid="534" Time="2016-12-19 19:00:22Z" Version="15.00.1076.004">
  <?xml version="1.0" encoding="utf-8"?>
  <soap:Envelope xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns:m="http://schemas.microsoft.com/exchange/services/2006/messages" xmlns:t="http://schemas.microsoft.com/exchange/services/2006/types" xmlns:soap="http://schemas.xmlsoap.org/soap/envelope/">
    <soap:Header>
      <t:RequestServerVersion Version="Exchange2010" />
      <t:ExchangeImpersonation>
        <t:ConnectingSID>
          <t:SmtpAddress>domain\username</t:SmtpAddress>
        </t:ConnectingSID>
      </t:ExchangeImpersonation>
    </soap:Header>
    <soap:Body>
      <m:FindFolder Traversal="Shallow">
        <m:FolderShape>
          <t:BaseShape>AllProperties</t:BaseShape>
        </m:FolderShape>
        <m:IndexedPageFolderView MaxEntriesReturned="1" Offset="0" BasePoint="Beginning" />
        <m:ParentFolderIds>
          <t:DistinguishedFolderId Id="inbox" />
        </m:ParentFolderIds>
      </m:FindFolder>
    </soap:Body>
  </soap:Envelope>
</Trace>

*****************************
Response from Exchange:
*****************************
<Trace Tag="EwsResponseHttpHeaders" Tid="534" Time="2016-12-19 19:00:22Z">
HTTP/1.1 500 Internal Server Error
...

</Trace>
<Trace Tag="EwsResponse" Tid="534" Time="2016-12-19 19:00:22Z" Version="15.00.1076.004">
  <?xml version="1.0" encoding="utf-8"?>
  <s:Envelope xmlns:s="http://schemas.xmlsoap.org/soap/envelope/">
    <s:Body>
      <s:Fault>
        <faultcode xmlns:a="http://schemas.microsoft.com/exchange/services/2006/types">a:ErrorNonExistentMailbox>
        <faultstring xml:lang="en-US">The SMTP address has no mailbox associated with it.</faultstring>
        <detail>
          <e:ResponseCode xmlns:e="http://schemas.microsoft.com/exchange/services/2006/errors">ErrorNonExistentMailbox>
          <e:Message xmlns:e="http://schemas.microsoft.com/exchange/services/2006/errors">The SMTP address has no mailbox associated with it.</e:Message>
          <t:MessageXml xmlns:t="http://schemas.microsoft.com/exchange/services/2006/types">
            <t:Value Name="SmtpAddress">domain\username</t:Value>
          </t:MessageXml>
        </detail>
      </s:Fault>
    </s:Body>
  </s:Envelope>
</Trace>