Testing a pose with a custom character resulted in this. My guess is bone rotation? Armature works fine in blender and Unreal.
The rotoscope shows that the pose was tracked quite well.
The character looks to be imported correctly.
Will try with a different armature.
Found the issue. The character is in T-Pose using a Blendshape, not the armature. Meaning that any deformation in the arms would result in that mess. Fixed.