Fines of up to $275,000 and a maximum 10 years in jail shall be impose to those who will be caught buying, selling or showing in public the award-winning Swedish film Children's Island across Australia, The Sydney Morning Herald reports.

The Australian Classification Board refused classification of the Swedish film, following a complaint lodged by the Australian Federal Police.

The ban was imposed following the review of three Classification Review Board members that found an offensive 49-second scene where a young boy was masturbating. His rigid genital was focused by the camera in a span of three seconds.

''The review board considered that although the scene was relevant to the story and was brief in duration, it is still the depiction of actual sexual activity by a minor and is not justified by context,'' the members wrote in their decision.

''While it is rare for the AFP to seek reviews of classification decisions, the AFP was concerned in this case that the movie contained child exploitation material. The AFP will continue to work with local and international law enforcement partners to detect, disrupt and bring to justice those who seek to produce, share and access child exploitation material," an AFP spokesperson told The Sydney Morning Herald.

However, for free-speech advocate Chris Berg, the AFP went beyond their jobs for what they did.

''It is a bizarre and rather extraordinary overreach by the AFP to go to the Classification Review Board to censor movies. If they believe this is genuine child pornography they should contact their state colleagues and ask them to pursue it. If they are just concerned about offence, then that is none of their business. It is not the AFP's job to protect people from taking offence," Mr Berg said.

Children's Island, Barnens ö in Swedish, is considered an art film as it follows the journey of an 11-year-old boy coming to grips with puberty.

The film released in 1980 won the Guldbagge (Sweden's most prestigious award giving body for films) and Sweden's official entry to the 54th Academy Awards.

Children's Island was directed by box office acclaimed director Kay Pollack.