I encountered that error message when I tried to add IAM role in Databricks to allow "access data from Databricks clusters without the need to manage, deploy, or rotate AWS keys."
Here's the steps I took to see the error message and the complete error messages are attached afterwards.

1. Admin Console
2. IAM Roles
3. Click "Add IAM Role" button
4. Enter the instance profile ARN into the textfield
5. Click "Add" button.

Then Databricks was trying to verify the ARN profile information.

After 30 seconds or so, I saw the following complete error message:

***Verification of the instance profile failed. AWS error: You are not authorized to perform this operation.
In rare cases, the validation error is due to an AWS unavailability or misconfiguration, rather than an actual permission issue. In this case, you can skip the validation and forcibly add an IAM role using the API. If you do this, please try creating a cluster with the role to make sure it works properly.***