MSDTC on RDS - no Active Directory

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I have SQL Server 2019 STD RDS that is not domain joined and it's only accessible inside VPC (no public IP). I have an internal AD domain and several web servers joined to that internal AD inside VPC. MDTC is configured to with no auth on those EC2 instance and also on RDS. When I try distributed transaction initiated from the web app (on the EC2 instance) I get following error:

The MSDTC transaction manager was unable to pull the transaction from the source transaction manager due to communication problems. Possible causes are: a firewall is present and it doesn't have an exception for the MSDTC process, the two machines cannot find each other by their NetBIOS names, or the support for network transactions is not enabled for one of the two transaction managers. (Exception from HRESULT: 0x8004D02B)

DNS resolution should be working on that RDS, I can't check since xp_cmd_shell can't be enabled to try it out so RDS should resolve EC2 instances, DNS servers are set on VPC DHCP settings. Security rules are currently to allow everything while I am troubleshooting. I did everything like I usually do without RDS

RDS option group settings

ENABLE_SNA_LU   true
ALLOW_OUTBOUND_CONNECTIONS  true
ALLOW_INBOUND_CONNECTIONS   true
ENABLE_XA   true
TRANSACTION_LOG_SIZE    4
AUTHENTICATION  NONE

The only question left here is, do I need active directory joined RDS for this to work (and ofc all servers joined to that same AD)? From all the docs and videos available this should work, but didn't find info anywhere is being part of AD hard prereq or not.

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