From what I've seen of the child welfare system they don't take kids away without good reason (at least in Canada), because honestly, no one wants to get sued for removing a child without any good reason.
The Dad is a convicted sex offender, he'll live with that title the rest of his life. Regardless of how long ago it was or whether or not he's recovered he still acted inpropriately with children and that still makes him at risk to act that way with his child.
And honestly, in a case involving sex and children, I'd rather be safe than sorry.
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