Australian Federal Police officers were warned by a judge saying they could face criminal charges over their arrest of a Sri Lankan Tamil man at gunpoint on terrorism charges, the Age newspaper reported.

Sydney accountant Arumugam Rajeevan, 43, was on his way to lobby a NSW senator in July 2007 when police removed him from his car at gunpoint, demanding he lie face down outside the senator's office with his hands cuffed behind his back.

The Age can reveal that during pretrial argument last year about the admissibility of Rajeevan's interview in the Victorian Supreme Court, Justice Paul Coghlan warned that police could face criminal charges if they answered questions about the circumstances of Rajeevan's arrest.

Police can face assault charges if they use more than reasonable force in an arrest.

During a hearing for Rajeevan and two Melbourne men yesterday, Justice Coghlan said many people who gave money after the 2004 tsunami could technically be caught by the same terror laws under which the three Tamil men are being prosecuted.

He said last year: ''A question of criminal liability arises in circumstances that the arrest and continued detention was potentially unlawful.''

As a result, Commonwealth prosecutors discontinued their bid to have Rajeevan's interview admitted in evidence.

Yesterday, Phillip Boulton, SC, for Rajeevan, said use of a firearm during the arrest of his client was ''illegal and improper'' and should be considered by the court in determining its sentence for Rajeevan, who has pleaded guilty along with two Melbourne men to providing money to a terrorist organisation, the Liberation Tigers of Tamil Eelam (LTTE).