A Canadian judge has released an American sex offender from custody after an immigration board hearing this morning.

The hearing for Malcolm Watson was held in Niagara Falls, Ont. after he was arrested Wednesday trying to re-enter Canada from the U.S.

The judge ruled he was not a high-risk offender.

On Monday a U.S. judge sentenced Watson, 35, to three years of probation for a sexual offence involving a 15-year-old girl. Under the terms of a plea bargain, Watson is allowed to serve out the sentence while living in St. Catharines, Ont. He is only allowed to return to the U.S. for probation hearings.

Watson attended the hearing with his wife. He was wearing a white dress shirt and looked relaxed, smiling from time to time during the proceedings, according to The Canadian Press.

Under the conditions of his release, Watson must continue to reside with his wife and three children at their St. Catharines home, and must check-in with officials whenever he crosses the border.

The federal government wants Watson sent back to the U.S.

On Thursday, Public Safety Minister Stockwell Day said Watson was arrested Wednesday as he tried to come back into Canada after a Buffalo, N.Y. court appearance.

Day said it is unacceptable for U.S. courts to exile convicted criminals north of the border.

"We don't want to see Canada become a haven for pedophiles or anyone else committing a serious crime," Day said outside the House of Commons on Thursday.

"We don't want U.S. courts getting the notion that we just take people here that they would have put in jail."

Watson is a landed immigrant who has lived in Ontario with his wife and three children for the past four years -- most recently in St. Catharines.

He was charged with sex offences after he was found in a car with a 15-year-old student. He was a teacher at the all-girls Buffalo Seminary at the time.

Watson pleaded guilty Monday to sexual abuse in the third degree and endangering the welfare of a child.

A judge approved a plea bargain that allows him to serve out his sentence in Canada.

Watson's lawyer, Oscar Smukler, has accused Canadian politicians of blowing the case out of proportion for political reasons, and said the media has made him out to be a high-risk offender, when he is nothing of the sort.

"He was convicted of having kissed a young lady and touched her breast outside her clothing," Smukler said.

In Canada the age of consent is currently 14 -- although the Conservative government has moved to raise it to 16. Watson's relationship with the student would only be considered illegal in Canada if sex occurred.

U.S. authorities don't consider Watson a sexual predator because they found no other victims. Instead, the former English teacher is considered a "level 1" sex offender.

Watson was detained by request of the Canadian Border Service Agency, on suspicion he had contravened the Immigration and Refugee Protection Act, a government source told The Canadian Press.

The Immigration and Refugee Board will also review Watson's case. If he is considered inadmissible, he could be deported back to the U.S. His current sentence would then be considered null and void.

With files from The Canadian Press