I enabled DEBUG config on the server and took a look at the logs. I have obfuscated all sensitive data in the paste below. What I see is that my AD account is being impersonated by 'NT AUTHORITY\SYSTEM' when I am opening folders and uploading files - could that be the issue?
2018-11-02 10:13:17,166 DEBUG ImpersonationContext [Session.1138:eSIM AT Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Impersonation begin -> 'Domain\MyDomainAccount'
2018-11-02 10:13:17,166 DEBUG SFTPServerMessageFactory [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Received message (type=11,len=31)
2018-11-02 10:13:17,166 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Received message (SSH_FXP_OPENDIR,id=38923)
2018-11-02 10:13:17,166 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] OnOpenDir(/Site/MainFolder)
2018-11-02 10:13:17,166 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Handle 1865685928 creTested for /Domain Home Folder/Site/MainFolder
2018-11-02 10:13:17,166 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sending SSH_FXP_HANDLE (requestid= 38923)
2018-11-02 10:13:17,166 DEBUG SSHServerChannel [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Transmit 23 bytes (max = 16384)
2018-11-02 10:13:17,166 DEBUG ChannelDTestaWindow [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Remote window size decreased to 2147483490
2018-11-02 10:13:17,166 DEBUG SFTPConnection [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sequence: 13
2018-11-02 10:13:17,166 DEBUG SFTPConnection [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sending 80 bytes
2018-11-02 10:13:17,166 DEBUG ImpersonTestionContext [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] ImpersonTestion end -> 'NT AUTHORITY\SYSTEM'
Here is log paste from uploading the file to the server
2018-11-02 10:13:22,901 DEBUG ImpersonTestionContext [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] ImpersonTestion begin -> 'Domain\MyDomainAccount'
2018-11-02 10:13:22,901 DEBUG SFTPServerMessageFactory [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Received message (type=3,len=67)
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Received message (SSH_FXP_OPEN,id=42243)
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] OnOpenFile(Name=SSH_FXP_OPEN,Type=3,RequestID=42243
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] absolutePTesth=/Site/MainFolder/CountryBasedSubfolder/in/test.txt
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] flags=58
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Testtributes=Valid flags=1, US=, G=, D=False, F=False, LI=False, R=False, W=False, Test=0, AD=1970-01-01 00:00:00, MT=0, MD=1970-01-01 00:00:00, P=0, S=31, U=)
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] file '/Domain Home Folder/Site/MainFolder/CountryBasedSubfolder/in/test.txt' does not exist
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Handle 500592728 creTested for /Domain Home Folder/Site/MainFolder/CountryBasedSubfolder/in/test.txt
2018-11-02 10:13:22,901 INFO SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Opened /Domain Home Folder/Site/MainFolder/CountryBasedSubfolder/in/test.txt for writing
2018-11-02 10:13:22,901 DEBUG SFTPSubsystemServer [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sending SSH_FXP_HANDLE (requestid= 42243)
2018-11-02 10:13:22,901 DEBUG SSHServerChannel [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Transmit 22 bytes (max = 16384)
2018-11-02 10:13:22,901 DEBUG ChannelDTestaWindow [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Remote window size decreased to 2147482211
2018-11-02 10:13:22,901 DEBUG SFTPConnection [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sequence: 26
2018-11-02 10:13:22,901 DEBUG SFTPConnection [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sending 80 bytes
2018-11-02 10:13:22,901 DEBUG SFTPConnection [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] Sent 80 bytes
2018-11-02 10:13:22,901 DEBUG ImpersonTestionContext [Session.1138:Site Test SFTP Site:Domain\MyDomainAccount:127.0.0.1] ImpersonTestion end -> 'NT AUTHORITY\SYSTEM'
If this does not help solve this case, I will create a helpdesk ticket.