The story
From rebracketing of phrases an uncle, mine uncle, thine uncle, etc. Compare neam and naunt, as well as French mononcle. For the verb, OED suggests an evolution in sense "to claim to be one's uncle" > "to cheat". It compares this derivation with cozen, which it derives from cousin. For the technical anthropological sense, compare nibling.
Etymology from Wiktionary, CC BY-SA 4.0.