I can understand why you are devastated . Your husband has lied to you by omission and put his own feelings ( of shame / embarrassment) above your child’s safety.
Im afraid it’s wrong to say that your child was never at risk. The only type of supervision that would be safe for a child would be if there was one supervising adult whose job it was to sit in the room / follow your BIL about the house , watching him at all times. Also the child should not be in physical contact with him, for example, sitting on his knee or hugging him. That’s the only way that you can say your child was safe.
But of course that’s not what happens in a normal family situation, children and adults move around from one room to another. It’s very easy for an adult to slip out of the room to go to the bathroom, the kitchen for a drink, outside for a cigarette et cetera, and be alone with a child.
I know of several situations where a child was sexually abused by a friend / family member / trusted adult while they were supposedly supervised and never alone with the children.
One was a dad when who went on play dates with his child and other mums and took photos of the children in public places like parks and cafes.
One was a mid teen boy who sexually abused the Dd of family friends when he and his parents visited her family home . This happened many times over years. No he wasn’t up in her bedroom with her, of course that would have aroused suspicion. He just seized the opportunity when they were alone in the kitchen or playing board games in the living room in full view of adults.
Another was a man who was a leader in a youth organisation and no of course he was never alone with the children as per the organisations policy. Except of course he snuck out from the group and managed to be alone with young people in the bathrooms / sleeping accommodation on residential holidays.
This man was convicted of multiple offences and aftre the trial, one of his ( now teenaged ) victims who had testified against him took his own life.
When I was about 12 - 13 years old, we had a “family friend “ who visited our home weekly . He would arrive about 5pm and sit in the living room chatting to my mother and I and waiting for my father to come home from work so he could talk to him . When my mother left the room to make him a cup of tea, he used to order me to come and sit on his lap, otherwise he would tell my mother that I had been extremely rude to him. I didn’t do it and made excuses to avoid him (like homework ). But the threat was very real as my parents would have believed him and not me and punished me severely for such wicked lies. I was very scared of him.
I know of a crèche worker who abused toddlers sitting on his lap in a room full of other adults and children.
I know these examples are horrible and shocking . But I want to convey to you OP and to the rather naive people on this thread that no contact between a sex offender and children is safe for the child.They are very clever, devious and plausible people who will find a way to get what they want.
Your husband and his family have put your child at risk and will go on to put other children at risk. They have done this because they care about your brother-in-law‘s feelings more than the safety of children. It’s also possible that they don’t believe that he was guilty. Or that they cling onto the belief that men who abuse children online won’t do it in person. Or that those who abuse strangers children wouldn’t do it to their own family.
Needless to say, all of these beliefs are wrong.