Fredo remained a threat to Michael so long as he could expose Michael's perjury. As an act of mercy toward his mother, Michael made sure nothing happened to Fredo while she was still alive. This doesn't mean Fredo was kept on a long leash. I am sure Michael had his phones tapped, and had him followed wherever he went as long as mamma was alive. When Michael "forgave" Fredo at Connie's request he had a perfect set up. Fredo was living on the compound and doing things like using Neri to drive his fishing boat. I am sure Al relished putting that bullet in Fredo's head once Fredo said his last "Hail Mary."