hello and welcome to the forum,
are you sure, as this is in the config?
server_side_encryption = aws:kms
i had a similar issue, with SSE-C.
i would take a read of this post, with workarounds and details on the beta.
Issues with aws s3 sse-c, getting strange log entries and errors - #8 by ncw
tl;dr
try adding --s3-upload-cutoff 0, this will force rclone to use md5 checksums.