No permissions to create file in Amazon S3 SFTP server using S3 file system?

I get the following exception when using SftpClient.Create(string):

Renci.SshNet.Common.SshException: 'Cannot open file in mode: CREATE|EXCLUSIVE|READ|WRITE'

I've given full access for the transfer protocol as well as the s3 file system using these 2 policies:
AmazonS3FullAccess

{
    "Version": "2012-10-17",
    "Statement": [
        {
            "Effect": "Allow",
            "Action": [
                "s3:*",
                "s3-object-lambda:*"
            ],
            "Resource": "*"
        }
    ]
}

AWSTransferFullAccess

{
    "Version": "2012-10-17",
    "Statement": [
        {
            "Effect": "Allow",
            "Action": "transfer:*",
            "Resource": "*"
        },
        {
            "Effect": "Allow",
            "Action": "iam:PassRole",
            "Resource": "*",
            "Condition": {
                "StringEquals": {
                    "iam:PassedToService": "transfer.amazonaws.com"
                }
            }
        },
        {
            "Effect": "Allow",
            "Action": [
                "ec2:DescribeVpcEndpoints",
                "ec2:DescribeNetworkInterfaces",
                "ec2:DescribeAddresses"
            ],
            "Resource": "*"
        }
    ]
}

I can successfully create & delete a folder, but the moment I Try to do so with a file, I get the above error.

I can successfully create& delete a file using a SFTP explorer like WinSCP. What's going on here?

Using SftpClient.UploadFile or the async extension UploadAsync works without hiccups.

Start by comparing the behavior of SftpClient.Create(string) with SftpClient.UploadFile and the async UploadAsync extension when connected to the Amazon S3 SFTP server. Reproduce the CREATE|EXCLUSIVE|READ|WRITE exception and compare it with successful folder operations and WinSCP file creation. Done would mean identifying whether the differing SFTP requests explain the failure and documenting or correcting the behavior.