Green’s Dictionary of Slang

1. to pick pockets.

1848		‘Ned Buntline’ Mysteries and Miseries of N.Y. I 36: It’s enough to break my heart to see a man of your talent and standing forced to [...] knuck tickers, and go on low sneaks!
1848		Ladies’ Repository (N.Y.) Oct. VIII:37 316/2: Knuck, to pick pockets.
1889		S. Bailey Ups and Downs of a Crook’s Life 78: I saw at least $100 in it before you ‘knucked’ it off the old gentleman.

2. see knuckle v.² (2)