I THINK Bael and Pinocchio bummed up against each other in the GREAT WIDE WORLD… at some point. They might have recognized each other as being from FTL just like French/Italians/ Chinese etc people recognize other French/ Italians/ Chinese etc people. ( May after a night of drinking down in their cups)
Anyways they form a friendship and share secrets. That is how Pinocchio knows about the knife and Rumple.